South Asia Must Plan El Niño Financing Before the Disaster Hits

“South Asia is preparing for El Nino with forecasts. It also needs to decide who gets the money first.“

A record Pacific heat anomaly is bearing down on a region that cannot afford surprises. The International Water Management Institute reports sea-surface temperature anomalies of 3.08 degrees Celsius, above the previous record of 3.02. South Asia is home to two billion people and produces almost a third of the world’s rice. IWMI’s ENSO Outlook indicates that between now and December, water stress, from too little or too much rain, will likely affect some 760 million people across the region. El Nino is expected to peak in late 2026 and early 2027.

The forecasting side is better than it has been in a decade. The harder part is money. IWMI notes that a strong seasonal forecast is generally not enough to release humanitarian funding, because forecasts show that risk is rising but not exactly where, when or how severely it will strike. “Early finance is a very important part of early warning,” says Mihir Bhatt of the All-India Disaster Mitigation Institute. A daily wage worker, he notes, may understand a warning and still go to work because the family cannot afford to lose income.

So the central argument of this piece is simple. Pre-disaster financing in South Asia should be designed around who receives the money, not only around when it is triggered. Triggers get most of the attention. Delivery decides whether the money does any good, and the region has been slower to write down delivery rules than trigger rules.

There is a working design to learn from, and it is nearby. In April 2026, the Asian Development Bank issued its first catastrophe bonds, providing $160 million in parametric earthquake and extreme-precipitation cover, split evenly between the Kyrgyz Republic and Tajikistan. According to Artemis, ADB’s Thomas Kessler said last week that the bonds come with a clear mandate to deliver any payouts to specific groups.

The bank set standard operating procedures with national ministries so that children, women, elderly people and people with disabilities who are registered in national social protection schemes would benefit from payouts. Reporting and auditing procedures are in place so that households actually receive the money, and investors get traceable impact reporting. Kessler said most investors valued this because it increased transparency and traceability of such an instrument.

South Asian governments could use the same logic. Many already run social protection registries and cash-transfer systems. A forecast-linked financing instrument that pays through those systems, with published procedures and audits, would get money to families faster than a post-disaster appeal and would show lenders and donors where it went.

IWMI describes how such a system might be layered. The Sri Lanka Red Cross’s Mahesh Gunasekara says early release of finance becomes possible once three conditions are met: strong evidence that El Nino predicts humanitarian impacts in a given country, pre-agreed trigger thresholds that turn seasonal forecasts into measurable indicators such as rainfall deficits, and a layered trigger system in which a seasonal forecast first releases “readiness financing,” with larger releases as confidence grows and observed data arrive.

IWMI also points to a pilot in Colombia, where small businesses receive weather alerts by WhatsApp and an immediate contingent credit line they can draw on only if the forecast event occurs. It suggests that a sovereign risk pool across South Asia could make insurance pricing more viable.

A fair objection is that South Asia is not Central Asia. The region’s countries are larger, their social protection systems uneven, and their hazards less predictable. Gunasekara makes the point himself: a super El Nino does not create a single hazard in Sri Lanka. It may mean drought and water shortages early and floods, landslides and diseases such as dengue later. That is exactly why a layered system with delivery rules written in advance is more useful than a single trigger. It can scale up and down with confidence in the forecast, and it reaches the same registered households each time.

What would it take? Three decisions, none requiring new science. National governments should agree which registry or transfer system a forecast-triggered payment will use, and publish the rules for who qualifies. Regional institutions and development banks should fund the audit and reporting layer, since traceability is what brings in investors. And triggers should start small: readiness financing now, larger releases later, tied to observed rainfall or disease thresholds that officials agree on before the season.

Nothing here is a call to copy a Central Asian bond into Dhaka or Colombo. It is a call to borrow one idea: write down, before the shock, which households are owed money and which system will carry it. Governments that do this can then choose the financing tool, whether a bond, a regional risk pool or a contingent credit line, that fits their budget.

The peak of the El Nino is still weeks away. Forecasts are ready. The money, and the plan for who receives it, should be ready too.