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Integrating Seasonal Forecasts and Insurance for Adaptation Among Subsistence Farmers : The Case of Malawi / Osgood, Daniel E.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Osgood, Daniel E.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Agriculture.
- Bank.
- Banks and Banking Reform.
- Climate change.
- Crops and Crop Management Systems.
- Damages.
- Debt Markets.
- Drought.
- Droughts.
- Emerging Markets.
- Farmers.
- Finance and Financial Sector Development.
- Financial Intermediation.
- Hazard Risk Management.
- Insurance.
- Insurance and Risk Mitigation.
- Labor Policies.
- Poverty Reduction.
- Private Sector Development.
- Risk.
- Risk reduction.
- Rural Development.
- Rural Poverty Reduction.
- Social Protections and Labor.
- Technology.
- Urban Development.
- Local Subjects:
- Agriculture.
- Bank.
- Banks and Banking Reform.
- Climate change.
- Crops and Crop Management Systems.
- Damages.
- Debt Markets.
- Drought.
- Droughts.
- Emerging Markets.
- Farmers.
- Finance and Financial Sector Development.
- Financial Intermediation.
- Hazard Risk Management.
- Insurance.
- Insurance and Risk Mitigation.
- Labor Policies.
- Poverty Reduction.
- Private Sector Development.
- Risk.
- Risk reduction.
- Rural Development.
- Rural Poverty Reduction.
- Social Protections and Labor.
- Technology.
- Urban Development.
- Physical Description:
- 1 online resource (30 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2008
- System Details:
- data file
- Summary:
- Climate variability poses a severe threat to subsistence farmers in southern Africa. Two different approaches have emerged in recent years to address these threats: the use of seasonal precipitation forecasts for risk reduction (for example, choosing seed varieties that can perform well for expected rainfall conditions), and the use of innovative financial instruments for risk sharing (for example, index-based weather insurance bundled to microcredit for agricultural inputs). So far these two approaches have remained entirely separated. This paper explores the integration of seasonal forecasts into an ongoing pilot insurance scheme for smallholder farmers in Malawi. The authors propose a model that adjusts the amount of high-yield agricultural inputs given to farmers to favorable or unfavorable rainfall conditions expected for the season. Simulation results - combining climatic, agricultural, and financial models - indicate that this approach substantially increases production in La Nina years (when droughts are very unlikely for the study area), and reduces losses in El Nino years (when insufficient rainfall often damages crops). Cumulative gross revenues are more than twice as large for the proposed scheme, given modeling assumptions. The resulting accumulation of wealth can reduce long-term vulnerability to drought for participating farmers. Conclusions highlight the potential of this approach for adaptation to climate variability and change in southern Africa.
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