METHODOLOGICAL GUIDANCE TO ASSESS THE VALUE FOR MONEY OF PREMIUM AND CAPITAL SUPPORT TOWARDS CLIMATE AND DISASTER RISK FINANCE AND INSURANCE

This report provides a framework to assess the Value for Money (VfM) of Premium and Capital Subsidies (PCS) in strengthening climate and disaster risk financing (CDRFI) for vulnerable countries. It introduces a methodology for ex-ante (forward-looking) evaluation, helping decision-makers compare different PCS options across or within countries.

The proposed SMART PCS approach balances cost-effectiveness and cost-benefit analyses by measuring the cost of delivering multiple non-monetary outcomes (e.g., people covered). It outlines a five-step process to quantify the “value” of PCS:

1. Pre-screen CDRFI scheme
2. Determine criteria
3. Design scoring methodology
4. Weight criteria
5. Aggregate scores and weights

The “money” side represents the donor’s cost (grant equivalent), not total societal benefits.

The method requires expert judgment, impartial analysis, and peer review to ensure transparency and comparability. Since the results are synthetic and abstract, decision thresholds must be defined for practical funding use in future development stages.