FONDEN, Mexico’s Fund for Natural Disasters, was established in the late 1990s as a mechanism to support the rapid rehabilitation of federal and state infrastructure affected by adverse natural events. FONDEN was first created as a budget line in the Federal Expenditure Budget of 1996, and became operational in 1999. Funds from FONDEN could be used for the rehabilitation and reconstruction of (i) public infrastructure at the three levels of government (federal, state, and municipal); (ii) low-incoming housing; and (iii) certain components of the natural environment (e.g., forestry, protected natural areas, rivers, and lagoons).

FONDEN consists of two complementary budget accounts, the FONDEN Program for Reconstruction and FOPREDEN Program for Prevention, and their respective financial accounts. The original, and still the primary, FONDEN Program is the FONDEN Program for reconstruction. In the early 2000s, however, in recognition of the need to promote stronger ex ante disaster risk management, the Government of Mexico began to allocate funding specifically for preventive activities. Although resources for prevention remain significantly less than those for reconstruction, the Mexican Government continues its effort to shift focus and funding from ex post response to ex ante disaster risk management. Fiduciary responsibility for the financial accounts lies with BANOBRAS, Mexico’s state-owned development bank.