1. Natural Disasters Fund Director General Ministry of Interior, Mexico
Secretaría de
Gobernación
SEGOB
NATURAL DISASTERS FUND
FONDEN
Rubem Hofliger
Natural Disasters Fund Director General
Ministry of Interior, Mexico

2. Background
In attention to the government’s concerning to increase their capacity to attend the damaged caused by natural phenomena without altering the public finances, by 1996 the Natural Disasters Fund (FONDEN) was created.
Although with the FONDEN constitution the trouble related to avoid a lead off on the regular programs resources was in a way solved, there were not a legal regulation which provides the correct control and transparency in the money application; therefore in 1999 the first FONDEN rules were issued, which has had over the years many substantial modifications to accomplish that the procedures be held with maximum efficiency and opportunity. =
Presence of disasters caused by nature
The Natural Disasters’ Fund (FONDEN) was created in 1996
Federal Government

3. Emergency and/or Disaster (meanwhile and afterwards)
Disaster Time Line
Disaster Prevention
(before)
Emergency and/or Disaster
(meanwhile and afterwards)
FONDEN Trust
FOPREDEN
FIPREDEN
FONDEN
Days To Weeks
Hours, Days to Months
Months to years
Days, Weeks to Months.
Immediate Fund
Occurrence of the phenomenon
EMERGENCY
DECLARATION
AID SUPPLIES FOR THE POPULATION
How it is detonated?
DISASTER DECLARATION
RECONSTRUCTION RESOURCES
All federal plans and programs are activated in order to attend the disaster

4. The FONDEN’ s purpose
The FONDEN is a financial tool composed by many instruments and driven by various Federal Government Agencies which participates in their operation, which has as a main purpose to provide resources to the 32 Mexican States and to the Federal Agencies (that are in charged of federal infrastructure) to attend the harm and damages caused by a natural phenomenon, whose disaster’s magnitude overcame their capacity of response with their own budget.
It’s a federal program which provide support in a complementary way to resources destined originally to attend natural disasters. Therefore, to get the resources approved it’s necessary that the federal and local entities justified that the disaster surpasses their financial standing, with regard to not have sufficient resources in its normal programs to attend the damages caused by the disaster.

5. damaged infrastructure risk transfer instruments
The FONDEN instruments
Immediate Fund: it’s purpose is to provide resources for the aid supplies acquisition to attend in an immediate way the urgent needs of the population in an emergency situation generated by a natural phenomenon related to life, health, alimentation, medical attention, dress, temporary shelter, as well as the rescue of people.
2. FONDEN Program: provide economic support for the reconstruction of infrastructure from the three orders of government damaged by a natural disaster; as well as for the affected dwellings of the low income population with no possibilities to access to an insurance and for the restitution of the forest resources, protected natural areas, rivers, lagoons, etc.
3. FONDEN Trust Fund: provides the resources from its patrimony to attend the actions foreseen in the FONDEN Program, as well as the contracting of insurances and risks transfer instruments.
Aid supplies
acquisition
Reconstruction of the
damaged infrastructure
and the contracting of
risk transfer instruments

6. The FONDEN procedures
To attend the federal infrastructure, all the resources will be provided thru FONDEN, with the condition that the federal entities justified that they don’t count with resources in their budgets to pay by themselves the damages. The trustee of the Federal FONDEN Trust is in charge of delivering the approved resources to the contractor businesses of the Federal entities according to the reconstruction advances.
In the event of damages in the infrastructure of the States and Municipalities, the supports provided by FONDEN will be until 50% of the total cost for the reconstruction. The federal entities will be in charged of the execution of this 50% and the local governments will be responsible for the reconstruction of the other 50% with their own resources.

7. Execution
The Ministry of Interior is the coordinator of the process, since the occurrence of the natural disaster until the approval of the resources, as well as monitoring the correct application of the resources in each and every reconstruction program, no matter if it’s federal or local infrastructure.
The execution of the reconstruction works corresponds to the Federal Entities and the Local States. The reconstruction of the federal infrastructure suffer no changes; the federal entities will be in charged of the reconstruction and FONDEN will pay 100% of the cost directly thru the Federal FONDEN trust.
For the local infrastructure, the States will have to go thru all the FONDEN process and then once the evaluation is done they will have to sign a contract with the federal government in which they will let the federal entities reconstruct 50% of the damaged infrastructure with FONDEN resources and they will be in charge of the other 50% with their own resources.

8. Ask for the confirmation
FONDEN PROCEDURES
Natural Phenomena
Local State
Technical entity
Ask for the confirmation
of the occurrence of
the natural phenomena
Issues an opinion
regarding the
occurrence of the
natural phenomena
I. Geological
Natural
disaster
Opinion?
II. Hidrometeorological
Beginning
1/2
Negative
End
Positive
III. Others
Notifies the State
that his request
is positive

9. $ APIN FONDEN PROCEDURES Installation of the evaluation committee
SEGOB
Delivery of the evaluation results
Installation
Local FONDEN Trust Committee/
SHCP
Local State
Each sector evaluates
and determine the
amounts required for
the reconstruction and
Request the issue
of the natural
disaster declaration
Approve the
list of urgent
actions to
be realized by
each sector
Local State
Issue and publish
on the national
official newspaper
the natural
disaster declaration
Present to the
Committee
their preliminary
lists of works and
actions to be done
2/1
2/3
Request for the
rapid response
resources to realize
urgent actions
Federal Agencies
Authorizes the
rapid response
resources to
realize the
urgent actions
Ask for resources to
attend the evaluation
Local State
Ask for advances
to start the
reconstruction $
APIN

10. Federal FONDEN Trust National Committee
FONDEN PROCEDURES
Federal Entities
Federal FONDEN Trust National Committee
SHCP
SEGOB
Approve
the advances
Issue a positive
opinion for the
documents of
each sector
so the resources
can be approved
Review and
present the
final documents
to access the
total resources
for the
reconstruction
Authorizes the
total resources
for the
reconstruction of
the federal
infrastructure and
as much as 50%
of the local
infrastructure for
entities to attend.
Meanwhile the
States will take
care of the
other 50%
Federal Entities
3/2
Fin
Start the urgent
works and
actions for the
reconstruction
with the
advances
authorized $ $

11. Change from a reactive system to a preventive system
One of the main targets of the Mexican Government is precisely to transit from a disaster reactive system to a preventive system.
To accomplish that, by 2004 two prevention programs were implemented: i) the Preventive Trust (FIPREDEN), and ii) the Natural Disasters Prevention Fund (FOPREDEN); which can be used by federal entities, as well as by the mexican states for the execution of preventive projects, focusing on risk reduction, eradicate vulnerability and exposition of public infrastructure and dwellings of low income population.
With more resources invested in prevention, we are achieving to avoid large disbursements of resources to attend the damages caused by natural disasters.
Reactive
Preventive

12. US $25 million dlls average
New challenges
TODAY
DESASTRE
Prevention
Reconstruction $$
Prevention budget per year:
Average reconstruction
resources per year: $
US $25 million dlls average
US $580 million dlls average
Balance:
Not investing in prevention lead to excessive material and social costs which also compromise the sustainable development of our country 12

13. ... main financial instrument to
New challenges
TOMORROW
DESASTRE
Reconstruction
Prevention $
FOPREDEN
... main financial instrument to
invest in prevention
FONDEN
... diminish
Investment in prevention per year:
Average loses per year:
Balance:
$ minimum
20% of the average losses
The prevention, understood as an investment, will represent in the near future substantial savings, which could be used in the development and economic growth of the country 13

14. Preventive aspects of FONDEN
The 4 preventive concepts of the (FONDEN):
Improvements and additions.
Risk transfer instruments.
Local state funds.
Specialized equipment to prevent and attend natural disasters.

15. FOPREDEN, FIPREDEN, IMPROVEMENTS AND ADITIONS
Preventive aspects of FONDEN
1. Improvements and additions
FOPREDEN, FIPREDEN,
IMPROVEMENTS AND ADITTIONS
FONDEN VS
FOPREDEN, FIPREDEN, improvements and additions: $1.53 $
FONDEN: $3,35 1 $
2.26
Improvements and additions: in the reconstruction budget, it’s possible to include mitigation actions to avoid future damages thru specific reconstruction norms that will reduce the vulnerability before future disasters
FOPREDEN, FIPREDEN, IMPROVEMENTS AND ADITIONS
$1.53 billions
FONDEN
$ 3.35 Billions

16. Preventive aspects of FONDEN
2. Risk transfer instruments
Since 2004, the Mexican Government has been working intensely in different schemes to protect the FONDEN patrimony, by transferring the risks through an insurance policy or a risk transfer instrument (e.g. cat bonds), as well as encouraging and providing incentives to the federal entities and to the local states to insure their assets and infrastructure, in order to gradually decrease the impact on federal and local budgets when a natural disaster of large proportions occurs.
The FONDEN legal regulation search to promote the insurance culture, compelling the Federal Agencies and State Governments to compromise to incorporate in their next budgets and annual programs, the sufficient resources to insure the infrastructure damaged by a disaster that will be reconstructed with FONDEN resources, before receiving the supports for the reconstruction.

17. Preventive aspects of FONDEN
3. Local states funds
Attending to an eminently preventive spirit, we seek that in a medium time limit all the States count with their own natural disaster fund, in order to decentralize this function from the federal government and avoid that all natural disasters that occur in the country continue being attended with federal resources.

18. Preventive aspects of FONDEN
4. Specialized equipment to prevent and attend natural disasters.
This program was created to attend the necessities that the federal entities that belongs to the National Civil Protection System have, to count with the appropriate and sufficient equipment to help the states and municipalities to attend all kinds of different situations caused by disasters of any kind.