Risk insurance against climate-related crop failures
10.12.2015 – Extreme weather events have increased significantly as a result of climate change. Droughts and floods threaten crop yields in many countries. GIZ is working with partner countries to make climate risk insurance available to affected farmers to protect them against losses.
In recent years, rain has either been too abundant or too scarce in the Indian region of Gujarat. The mango farmers there are on the verge of ruin because of several poor harvests. The situation is similar for many farmers in developing countries and emerging economies: when natural disasters destroy their crops, their risk of poverty grows. The same applies when market prices drop for other reasons.
Risk insurance can help compensate for such losses. However, there are still too few people in a position to access such insurance; only 100 million people around the world are currently benefiting from this instrument. The declared goal of the G7 countries’ climate insurance initiative, InsuResilience, is to insure at least 400 million additional people against climate-related crop failures or other losses by 2020.
In India, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is working on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) to develop insurance schemes for farmers. GIZ and its Indian partners are developing models for protecting farmers and communities in cooperation with Indian insurance companies, the agricultural industry and agricultural producer groups. An initial result is that 500 mango and grape farmers can now insure an area of 1,000 hectares against crop failure.
In addition to farmers, states can also buy insurance against natural disasters in order to have quick access to funds for disaster preparedness. Some 70% of the total global economic damage caused by natural disasters in recent years was uninsured, posing a major challenge for the financial strength of a country. GIZ and Swiss Re concluded a development partnership in November in order to support governments in Asia and Africa in better combating climate-related risks.
For example, they provide advice on how to create the political frameworks for combating climate risks. The aim of Swiss Re and GIZ is to share workable solutions through this develoPPP.de development partnership in order to protect as many farmers and governments as possible from climate-related risks. The exchange of experience and knowledge is also the focus of the event ‘Shaping effective climate risk management: The role of (NAP) and climate-risk insurance’, which took place on Friday, 11 December 2015 as part of the Paris Climate Change Conference. Among other things, GIZ, the Munich Climate Insurance Initiative and the Kreditansalt für Wiederaufbau, offered practical insight into the advantages of climate risk insurance.