How remittances and migrant networks can help mitigate climate disasters

Hurricane season is coming to an end in the Atlantic. In response to historically warm waters, the National Oceanic and Atmospheric Administration (NOAA) upgraded its predictions to ‘above normal’ this year, expecting 14 to 21 named storms. The roulette of storms through to the end of November serves as a stark reminder of our vulnerability to climate disasters. Last year, storms during hurricane season resulted in $110 billion in losses in the United States. Lower-income families and communities are at particular risk and often suffer disproportionate, life-altering impacts with one big storm.

As the effects of climate change worsen, those who lose their homes and livelihoods will be faced with the decision to migrate. In Central America, storms have already pushed many to move. We saw this after Hurricane Mitch in 1998, which led to the Temporary Protected Status of over 59,550 Central Americans in the US, and more recently after hurricanes Eta and Iota in 2020. Climate change doesn’t just bring stronger storms: slow-onset impacts like rainfall variability and drought, and sudden-onset disasters like flash flooding, will likely fuel more migration within countries and across borders.

How can the US better prepare for the impacts of climate change in the region and help Central Americans protect their homes and livelihoods? Networks created through migration may offer a creative solution. The flow of remittances – money transfers from family and friends abroad – are one pathway by which households in Central America can receive funds faster, before a disaster.

Our organisation, Mercy Corps, has partnered with Remitly, a leading digital financial services provider, to encourage the flow of remittances from the US to Central America in advance of forecasted storms. By getting money into the hands of families sooner, we hope to better prepare households across Central America to weather hurricanes and their impacts.

In the 2022 hurricane season, Mercy Corps and Remitly sent early-warning information to around 5,000 remittance senders through in-app and email messages, along with a $5 transfer discount, or a fee-free transfer offer, to transfer money before a forecasted hurricane in Huehuetenango, Guatemala. This communication encouraged Remitly’s customers who regularly send remittances to Huehuetenango to send funds to help family and friends prepare before the storm reached the area. Early-warning information was based on forecasts from the National Hurricane Center, the leading voice in tropical cyclone data and predictions.

This hurricane season, we expanded the pilot to more people across Guatemala, Honduras, Nicaragua and El Salvador to further test the model and collect more robust evidence on how remittances can fund early action. At the time of writing, no storms have threatened Central America yet, and so the number of people to be reached by this expanded pilot has yet to be determined.

The innovative approach adopted in this partnership highlights a potential new role for migrants and the private sector to play in disaster preparedness. The window of time before a disaster is key. Research indicates that $1 invested in disaster mitigation ahead of time can save $6 in losses. This ideal does not always align with reality. In conversations with our Mercy Corps teams, rural communities in Guatemala expressed that support after a disaster is often too little, too late. While foreign and national assistance can support early action to save lives, homes and livelihoods, the scale of climate change will require innovative and additional forms of support.

There are a growing number of ‘anticipatory action’ approaches that deploy assistance before a disaster. Traditional forms of anticipatory action may involve a humanitarian organisation sending unconditional cash transfers ahead of a drought, local disaster response agencies passing out emergency kits before a volcanic eruption, or communities coming together to place sandbags to protect areas from flooding. This project expands the idea of who can promote anticipatory action to include diaspora networks and the private sector. While some may question the reliance of this novel approach on households to fund anticipatory action themselves, the intention is to supplement, not replace, traditional assistance from governments, humanitarian organisations, and communities. In doing so, this work aims to harness the power of remittances flowing to Central America.

Remittances are an important resource for Central American economies and households. In 2022, the World Bank found that remittances made up 27.1% of gross domestic product in Honduras, followed by El Salvador (23.8%), Nicaragua (19.9%) and Guatemala (19.8%). Despite their outsized role in the region’s economies, remittances remain an untapped resource for anticipatory action.

Through creative approaches, diaspora networks and remittances can help vulnerable households in Central America better prepare for disasters like hurricanes. Humanitarian organisations, governments, and the private sector must reconsider migration and remittances as adaptive tools to help save lives and livelihoods in the path of climate change.

Ellen Reid is a Research Officer at Mercy Corps, contactable at ereid@mercycorps.org.