Through FONDEN, the central government of Mexico provides disaster assistance for the following purpose:
Rehabilitation and reconstruction of damaged federal public infrastructure, (covering 100% of costs).
Rehabilitation and reconstruction of damaged subnational public infrastructure (covering up to 50% of costs).
Support to strengthen resilience of damaged infrastructure against future disasters– i.e. to improve rather than merely replace infrastructure (an estimated 25% of approved funding requests are for this purpose [World Bank et al., 2012]).financing the rehabilitation and reconstruction of low-income housing.
Post-disaster assistance through FONDEN is available only if an emergency has been officially declared1, if the disaster has been scientifically confirmed, and if a damage assessment has been carried out (this is usually done jointly by the central and subnational governments).
To discourage overreliance on disaster assistance provided through FONDEN, rules have been established that limit reimbursement for uninsured public infrastructure that is damaged more than once. If support for reconstruction of a federal asset is requested a second time, FONDEN covers 50% instead of 100% of costs. For subnationally owned infrastructure, FONDEN covers 25% rather than 50%. FONDEN will not provide resources for a third reconstruction request. For insured public infrastructure, however, eligibility for FONDEN funding remains the same even after repeated reconstruction requests.
Under the Law regarding the Financial Discipline of Federal and Municipal Entities and the General Law of Civil Protection (Ley General de Protección Civil) subnational governments have the primary responsibility to provide post-disaster support for damage to subnationally owned public infrastructure and for the population affected. The General and Operational Rules for FONDEN allow subnational governments to request funding from the central government to support affected populations when subnational financing capacities are exceeded and an emergency has been officially declared. However, the laws do not specify a maximum amount for post-disaster assistance that can or should be provided to subnational governments, allowing room for discretion. As specified in the Disaster Fund Specific Operations Guidelines (Lineamientos del Fondo para la Atención de Emergencias), the need for assistance is reassessed on a ten-day basis. Assistance ends if the General Directorate of Civil Protection, assisted by the National Centre of Communications (Centro Nacional de Comunicaciones, CENACOM) and subnational authorities, determine that the emergency situation is over, or if subnational entities have recovered their operative and financial capacities.
Low-income households whose homes have been damaged or destroyed by a disaster receive compensation through FONDEN of up to USD 6 700, to be used for reconstruction. For damaged housing items that cannot be covered by insurance, the Housing Institute may offer a small allocation of USD 1 100 to USD 1 400 per household. The compensation amount is based on the extent of damage and is independent of any kind of ex ante preventive provisions made by the household. The compensation for low-income households is handled by the Ministry of Territorial Development. Compensation is also available for household contents damaged during a disaster. Complementing the housing compensation, the Ministry of Social Development provides temporary employment allowances for households whose income has been affected by a disaster.
Everything related to the restoration of public services, such as water and waste management, can be immediately financed through the Immediate Partial Support Mechanism (Apoyos Parciales Inmediatos, APIN). Funding for immediate relief items, such as food, medical supplies, bedding, and cleaning supplies can be funded via the Emergency Fund (Fondo para la Atención de Emergencias, previously Fondo Revolvente). Both funds are part of FONDEN. The Emergency Fund makes up around 10% of FONDEN’s resources (World Bank et al., 2012). It can be accessed if an emergency declaration is issued by the Ministry of Interior (Secretaría de Gobernación, SEGOB). However if only one subnational government (i.e. state) is affected and a national disaster declaration is not warranted, the state may still be eligible for central government funding under the Emergency Fund, provided a subnational disaster has been declared. In addition, resources for post-disaster recovery in the months after the disaster are available via the FONDEN Trust.
The Fund to Support the Rural Population affected by Climate Hazards (Fondo de Apoyo Rural por Contingencias Climatológicas) was established to provide support to low-income farmers who do not have agricultural insurance and who are affected by climate-related hazards. The maximum federal contribution is set at 70% of the insurance premium for farmers for insurance offered through the Mexican Government Insurance Company Agroasemex S.A. (World Bank, 2009).