Rainfall index insurance to help smallholder farmers manage drought risk
A new paper on CIAT’s work on insurance has just been published. CIAT’s Peter Laderach says that rainfall index insurance is a key tool to decrease the vulnerability of poor farmers in the tropics. The article, published in the journal ‘Climate and Development’, volume 2, reflects CIAT’s ongoing use of the most cutting edge technology in order to address climate changes’ most immediate and unpredictable threats to agriculture. The abstract and link to the paper can be found below.
The struggle to find sustainable formal insurance for droughts in developing countries captures the attention of many in the development community for good reason. Droughts disrupt the development process, and the impacts of drought are exacerbated by an inability on the part of the poor to invest combined with a lack of access to credit. This paper first examines the problems associated with traditional approaches to formal drought insurance and goes on to examine the potential of index insurance that is event-driven. A combined weather-generation and crop simulation modelling approach is used to estimate site-specific risks. The method is demonstrated in a case study for dry bean production in Honduras.