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Mexico's Fund for Natural Disasters (FONDEN) and Fund for Prevention of Natural Disasters (FOPREDEN)

Cholula, Mexico. © Russ Bowling cc by 2.0

Mexico

The Fund for Natural Disasters (FONDEN) was established in Mexico in 1996; it works with budget funds, in addition to financial risk transfer instruments, such as catastrophic risk sovereign bonds. The Fund for Prevention of Natural Disasters (FOPREDEN) was created in 2003 to complement FONDEN, providing a dedicated fund for disaster prevention (OECD, 2013). Funds are available for three main areas: risk assessment, mitigation or risk reduction, and strengthening the prevention culture (OECD, 2013). FOPREDEN has an annual budget of approximately US$ 19 million per year since 2008, and has financed 130 projects, totalling US$ 89 million in its first 8 years (OECD, 2013). The existence of FOPREDEN shows a change in strategy away from reactive ex-post financing system, to an ex-ante prevention attitude (OECD, 2013).

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