Coping with Climate Change through Weather Insurance

Oxfam America is an international relief and development organization that focuses on creating long-lasting solutions to poverty, hunger, and injustice. The vision of the organization and its member is to live in a just world without poverty. Oxfam America is just one of 15 organizations that are apart of internation confideration, Oxfam. Each of the 15 organizations are seperate from each other and are located around the world. Each organization tends to have a focus on certain issues. Oxfam America works on a wide arrange of issues, but their current campaigns focus on solutions to climate change, aid reform, and the rights of poor communites.

Oxfam and its partners believe that the accessibility of weather insurance to poor rural farmers is an important coping mechanism to farmers experiencing the adverse effects of climate change. In 2008, The Horn of Africa Risk Transfer for Adaptation (HARITA) project began in the village of Adi Ha in Northern Ethiopia. The HARITA model of managing climate risk is based on three components: risk reduction, risk transfer, and prudent risk-taking. The risk reduction activities are completed by the entire community to reduce its risk of feeling the effects of droughts.

The risk transfer component of HARITA is weather insurance. The premiums from the weather insurance can be paid with cash or through the insurance for work (IFW) program. Poor farmers that participate in Productive Safety Net Programme (PSNP), a government-run food for work program, can pay for the insurance through labor. One of the most important aspects of weather insurance is that it makes poor farmers look less risky to banks and micro-finance institutions.

The prudent risk-taking component of HARITA is through micro-finance credit. Many farmers fear loan default for reasons they are unable to control, for example droughts. Farmers that purchase insurance are less scared to take out loans because they have insurance if a drought should occur. The insurance gives the farmers a sense of security, which provides them with more options to improve their next harvest with the help of micro-finance credit.

Because of the success of the pilot program in Adi Ha and the other four villages, Oxfam America and the World Food Programme (WFP) reached an agreement to launch a five-year program modeled after the HARITA project. The Rural Resilience Initiative (R4) will target the communities most vulnerable to climate change in other regions of Ethiopia and three other countries starting in 2011.

One criticism that I have of this project is that Oxfam does not have a solution to their continual payment of labor paid weather insurance. Oxfam needs to find outside funding to take over this part of the project otherwise the NGO will be responsible for paying it until the project ends.

For More Information:

A Tiny Seed and a Big Idea

Weather Insurance Coming to U.S. Farmers

World Bank Training 8 African Countries on Weather Insurance

Photo courtesy of: oxfamamerica.org