Pilot Launch | Preparing for the worst: Anticipatory action with cash transfers empowers flood-prone areas in Nepal
Community organizers participating in a digital financial literacy workshop to empower local communities
Mercy Corps Ventures, Mercy Corps Nepal, and Rumsan launched an anticipatory action pilot program to support flood-prone communities in Nepal before the onset of a disaster. The pilot will test the use of blockchain-powered smart contracts for automated anticipatory actions based on forecast data and a multi-signature trigger.
In brief:
Early warning systems can save lives and reduce damage by up to 30%. However, despite the proven benefits, one-third of the world’s population — primarily in least-developed countries — still lacks access to these vital systems.
In Nepal we will test how blockchain-powered smart contracts can improve the efficiency of Anticipatory Action, providing early warning and cash assistance before flooding strikes
We seek to prove how smart contracts lead to improvements in automation, access to information, speed and cost reduction for humanitarian aid programs
The Problem
Flooding in Nepal has become a recurring and intensifying issue, often linked to the country’s heavy monsoon rains. In October 2024, Nepal experienced one of the heaviest rainfall events in 54 years, as recorded by the Department of Hydrology and Meteorology (DHM). The extreme rainfall caused catastrophic flooding across several regions, displacing thousands, destroying homes, and cutting off access to essential services.
Such disastrous situations are further complicated by the fact that a significant portion of the population is living in extreme poverty. However, much of humanitarian support arrives after communities have already suffered the worst impacts, too late to prevent major loss of life and property. Aid distributed before the disaster is significantly more effective than traditional humanitarian responses — according to the Food and Agriculture Organization (FAO), every dollar invested in proactive disaster response can yield up to seven dollars in benefits and avoided losses for families.
A significant challenge in disaster preparedness is also the lack of localized, inclusive, and timely early warnings that enable communities to take preventive actions before a disaster strikes. Without timely early alerts, vulnerable populations remain unprepared, increasing the risk of major losses. When effective early warning systems are in place and activated 24 hours ahead of a disaster, they can save lives and reduce damage by up to 30%. However, despite the proven benefits, one-third of the world’s population — primarily in least-developed countries — still lacks access to these vital systems.
The Pilot
How it Works: The Rahat platform uses forecast data to trigger the release of tokens and risk communications.
Mercy Corps Ventures has partnered with Mercy Corps Nepal and Rumsan to launch an Anticipatory Action pilot in Nepal. The pilot project focuses on Laljhadi Rural Municipality and Punarbas Municipality, located in the Kanchanpur District of the Sudurpashchim Province. These areas are particularly vulnerable to flooding due to their geography and high poverty rates, with Sudurpashchim Province experiencing the highest poverty rate in Nepal at 34.16%. Communities here face challenges including inadequate infrastructure, limited access to emergency response mechanisms, and dependence on agriculture, which is frequently devastated by floods, especially during the monsoon season from June to August.
The pilot will use Rumsan’s solution, Rahat, integrated with Stellar’s Disbursement Platform (SDP) and Soroban smart contracts to test how blockchain-powered tools and real world data such as forecasts, can improve efficiency by automating anticipatory action. This includes actions such as the timely delivery of localized early warning messages and trigger-based cash transfers to improve disaster preparedness and resilience of vulnerable households. The pilot will also test how the use of a multi-signature trigger mechanism can ensure transparency and accountability of anticipatory actions by requiring approvals from multiple stakeholders in smart contracts.
Beneficiaries redeem their tokens from participating vendors to buy goods and services or cash out. Rahat can be used in low-tech environments, with SMS and USSD based features for beneficiaries without smartphones.
Learning Agenda & Key Hypotheses
Integrating weather data from multiple sources with smart contracts increases the speed of the delivery of humanitarian aid and anticipatory action while lowering overhead costs. Manual processes linked to trigger activation can be eliminated, and the stakeholders involved in the validation of triggers can receive information in real-time. Some of the research hypotheses and related indicators to be measured throughout the pilot include:
— Automation: What current processes conducted manually in Anticipatory Action (AA) can be automated with an on-chain AA system?
Process Analysis: Total number of program processes automated using the Rahat platform
Average reduction in time to complete identified program processes manually compared to using Rahat platform
Ease of implementation: Does the use of this platform make AA implementation easier for Mercy Corps staff, and how?
— Speed: How does the use of smart contracts to automate trigger activation and disbursement reduce delivery times for AA?
Time elapsed from hazard event onset to trigger activation
Time elapsed from trigger activation to receipt of early warning messages by participants
Time elapsed from trigger activation to receipt of cash assistance by participants
Time elapsed from trigger activation to expenditure of funds (80%+ ) by participants
— Access to information: Does the use of a multi-signature trigger mechanism improve how stakeholders access and disseminate the information required to confirm and validate trigger activation?
Timeframe for trigger activation to be confirmed by key stakeholders compared to existing processes
Ease of access to trigger activation information (timing, geography, trigger data, etc.) by stakeholders compared to existing processes, such as email
— Cost reduction: Can the use of an automated system reduce the overall costs of delivering AA?
Cost per beneficiary in ongoing or past programs vs. cost per beneficiary in pilot
Loss-related costs: Total value of asset loss in the AA group compared to households not enrolled in AA program, and compared to past AA implementations
This pilot uses multi-signature triggers with smart contracts to streamline early actions, including sending timely and localized warning messages and delivering accountable and transparent anticipatory cash, improving disaster preparedness. By reducing response times and removing the delays caused by manual processes, this project seeks to show how blockchain technology can make humanitarian aid faster, easier, and more reliable.
Ununderbanked people in need can redeem tokens in a low-tech environment using Rahat
If successful, this pilot will be one of the first times a humanitarian organization has implemented a project demonstrating how blockchain can support and potentially simplify anticipatory action programming. More importantly, the system can be scaled across geographies in Nepal and beyond to offer a sustainable solution to emerging challenges in disaster risk reduction and management. This program has the potential to transform how anticipatory action programs are delivered, empowering communities and strengthening their resilience against future disasters.
