Climate risk insurance should protect farmers against   risks

15Feb 2021
Editor
The Guardian
Climate risk insurance should protect farmers against   risks

Climate risk insurance is a type of insurance designed to mitigate the financial and other risk associated with climate change, especially phenomena like extreme weather.  The insurance is often treated as a type of insurance needed for improving the climate resilience of poor and developing-

- communities.  Critics of the insurance, say that such insurance places the bulk of the economic burden on communities responsible for the least amount of carbon emissions.  

Moreover, its theorised that high-premiums in high risk areas experiencing increased climate threats, would discourage settlement in those areas.  The international community invested in developing further support for this kind of insurance through the InsuResilience Global Partnership launched at COP23.  

This group, supports regional programmes such as Climate Risk Adaptation and Insurance in the Caribbean (CRAIC) and international organisations like the Munich Climate Insurance Initiative.  The ACT Alliance published a guidebook for equitable and climate justice oriented model for climate risk insurance in 2020.  

As the COVID-19 pandemic continues to spread into countries already dealing with the impacts of drought, economic crises and conflict, the German Ministry for Economic Cooperation and Development (BMZ) has provided USD 5.9 million to ensure that the UN World Food Programme (WFP) can continue to protect 1.2 million vulnerable African farmers with climate risk insurance.

This donation comes at a crucial time. The COVID-19 pandemic keeps colliding with the climate crisis. While the immediate priority of many countries is to protect people and prevent the spread of COVID-19, it is essential to have safety nets in place that protect vulnerable people from the double threat of COVID and climate impacts. Heat waves, floods, storms and droughts are compounding the economic and public health effects of the pandemic, putting an additional burden on overstretched health services. Indeed Germany's donation will enable these countries to strengthen their safety nets and manage two hazards at the same time.

Countries which experience climate shocks that damage crops this year or the next, the impacts of the COVID-19 pandemic will be compounded and less food will be available in the markets, which could lead to food crises. This will create a situation where countries are faced with having to feed more people while at the same time trying to control the spread of COVID-19.

This is why this insurance could support 'double resilience' for vulnerable people. It is protecting them from both hunger and the impacts of COVID-19 on market access.

Africa ought to act much faster to help partner governments at a difficult time when the countries of the world need to support each other. If a drought occurs next season, having a payout from our climate risk insurance policy would free up budgetary resources that Mauritania would have otherwise needed to split between food security and health responses.

The insurance scheme is part of the African Union's African Risk Capacity (ARC) - innovative risk management and resilience-building institution that helps African Union member states manage climate and disaster risk and adapt to climate change.   ARC is also offering governments comprehensive technical support for disaster preparedness and disaster risk management.

As part of the InsuResilience Vision 2025, Germany and the other G7 countries have committed to ensuring 500 million poor and vulnerable people are covered against climate and disaster shocks by pre-arranged finance and insurance mechanisms by 2025. ARC Replica is a vehicle to support the achievement of this goal.

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