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Scaling Up Agricultural Adaptation through Insurance

Bringing together insurance, big data and agricultural innovation - 14 May 2017, Bonn, Germany

May 11, 2017

A one-day conference on 'Scaling up Agricultural Adaptation through Insurance" will take place on the sidelines of the 46th session of the Subsidiary Body for Scientific and Technological Advice (SBSTA), set to take place from 8 to 18 May 2017 in Bonn, Germany. The conference is co-hosted by CTA, the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) and the Syngenta Foundation for Sustainable Agriculture (SFSA).

Agricultural insurance is an important tool which can help address the increasingly erratic weather and climate shifts, by providing indemnity payments to farmers. However, traditional insurance schemes are costly and not viable for many remote rural smallholders. Fortunately, considerable advances have been made in the field of index-based agricultural insurance, which involves linking payouts to scientific 'triggers' or thresholds beyond which agricultural production begin to suffer. Furthermore, there has been a growing emphasis on climate insurance in the UN Framework Convention on Climate Change (UNFCCC) processes, and the Paris Agreement explicitly identifies insurance solutions as an area of cooperation to address climate impacts.

The event will bring together the climate change, agriculture and insurance communities to highlight the value of index-based insurance, draw lessons and identify key challenges for effective scaling up of index-based insurance as a climate change adaptation action. CTA will be represented at the event by Michael Hailu, CTA's Director, and Oluyede Ajayi, Senior Programme Coordinator for Agricultural and Rural Development Policy.

Bringing together insurance, big data and agricultural innovation

As climate change takes hold, increasingly erratic weather and climate shifts threaten already tenuous agricultural livelihoods and food security in the developing world. Agricultural insurance is an important tool which can help address this risk, by providing indemnity payments to farmers. However, traditional insurance schemes rely on physical verification of losses, which is costly and not viable for many remote rural smallholders.

Fortunately, considerable advances have been made in the field of index-based agricultural insurance, which involves linking payouts to scientific 'triggers' or thresholds beyond which agricultural production begin to suffer. Index-based insurance schemes are now being piloted and scaled up in many countries including Bangladesh, Ethiopia, Guatemala, Honduras, India, and Nigeria.

Given the number of index-based agricultural insurance initiatives globally, the pace of change in science and technology, and interest in insurance as means to adapt to climate change, it is opportune to pull together the collective experience and draw lessons for further implementation and scaling up. Furthermore, there has been a growing emphasis on climate insurance in the UNFCCC processes, and the Paris Agreement explicitly identifies insurance solutions as an area of cooperation to address climate impacts.

The CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS), the Technical Centre for Agricultural and Rural Cooperation (CTA) and Syngenta Foundation for Sustainable Agriculture (SFSA) are the hosts of this one-day conference on 'Scaling up Agricultural Adaptation through Insurance" on the sidelines of UNFCCC SBSTA week in Bonn.

Parallel session 1: Connecting insurance with farmers' needs

Weather-based insurance has the potential to benefit farmers by assisting them to withstand the effects of climate change. Through the provision of an insurance cover against erratic weather, farmers can be protected against food insecurity and hunger. Pilot projects on insurance have been implemented in different forms by a number of actors in various geographical areas. Some successes have been recorded and lessons have been learnt. In the new effort to scale up weather insurance, it is critical that it responds to the felt needs of farmers and the particular challenges that they face. In efforts to scaling-up weather insurance beyond pilots on limited scale, farmers' needs must be central to its design and implementation.

The parallel session will focus on connecting insurance to farmers' needs by (i) identifying the key critical needs of the various groups of farmers, (ii) tease out key lessons learnt from past and on-going insurance, (iii) address gaps in the design and implementation of weather insurance and, (iv) identify specific approaches to promote inclusive weather insurance.

Chair/Moderator: Prof. Nick van de Giesen, Delft University of Technology, The Netherlands

Rapporteur: Dr Olu Ajayi, Senior Programme Coordinator, Technical Centre for Agricultural and Rural Cooperation (CTA), The Netherlands

Parallel session 2: Big data to improve index insurance products

For insurance to help smallholder agriculture adapt, at scale, to variable and changing climates, it must address several challenges, including:

  • Developing indexes (e.g. multi-scale) that capture a sufficient proportion of the climate-related risks important to smallholder farmers;
  • Deploying supporting M&E systems that reduce information asymmetries, transaction costs, basis risk and moral hazard;
  • Adopting efficient and scalable approaches that tailor insurance products to local needs and contexts.

It will be difficult for an insurance program to scale to tens of millions if it still relies on face-to-face interaction to capture farmers’ input into product design, on expensive ground-based methods for claims settlements, or on individual spreadsheets to administer customer contracts.This session explores what “big data” approaches offer for addressing these challenges. The overlay of meteorological datasets, remotely sensed crop and rangeland health, farm & agronomic survey data, customer preferences and supply chains leads to a much more nuanced approach to climate risk management, especially as databases develop over time.  It can allow holistic product bundles tailored to the needs of different kinds of farmers, better understanding of climate risk for index design, or much more effective integration between insurance customers and other value chain stakeholders in a growing smallholder contract farming context.  Insurance can act as an incentive for farmers to share vital information about planting dates, seed types and other agricultural practices known to control the largest fraction of yield variability in smallholder settings. However, both practical and ethical questions remain. What is the most appropriate data to collect, hold and use, and by whom?  What are the regulations and privacy implications of big data for insurance?  What are the most effective methods of data collection and proven case studies for big data in agricultural insurance? This session seeks to discuss and shed light on some of these issues.

Chair/Moderator: Jim Hansen, Flagship Leader, Climate Risk Management, CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS)

Speaker: Pierre C. Sibiry Traore, Director of Research and Development, Manobi

Rapporteur: Pramod Aggarwal, Regional Program Leader for South Asia, CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS)

Parallel session 3: Connecting insurance to climate-smart technologies and practice

Experiences from index insurance initiatives in India, Kenya, Rwanda, Ethiopia and Senegal suggest that bundling insurance with production inputs such as drought-adapted seed and other climate smart agricultural technologies and practices (and sometimes finance) can make insurance more attractive to farmers.Well-designed index insurance can achieve specific risk objectives such as protecting farmers’ livelihoods in the face of major climate shocks by enhancing farmer uptake of climate smart agricultural technologies and practices. In insurance programme this has been achieved either through the direct bundling of farm inputs with insurance or through including insurance within a larger risk management portfolio. Examples of the former include ACRE Africa and insurance linked with credit in Zambia. The R4 Rural Resilience Initiative in Ethiopia is a good example of the latter approach whereby farmers can pay for the insurance through labour on climate-smart agricultural projects (Food for Assets), alongside access to credit and savings.The session will explore further the issue of bundling insurance with climate-smart technologies and practices drawing on existing case studies and participants’ experiences and perspectives.

Chair/Moderator: Jon Hellin, Value Chain and Poverty Specialist, International Maize and Wheat Improvement Center (CIMMYT)

Speaker: Wellingtone Maaka Wasike, Head of Marketing, Agri SeedCo Kenya (TBC)Rapporteur: Helen Greatrex, Associate Research Scientist – Index Insurance, International Research Institute for Climate and Society (IRI)

Rapporteur: Helen Greatrex, Associate Research Scientist – Index Insurance, International Research Institute for Climate and Society (IRI)