As a consequence of climate change, agriculture in many parts of the world has become a riskier business activity. Given the dependence on agriculture in developing countries, this increased risk has a potentially dramatic effect on the lives of people throughout the developing world especially as it relates to their financial inclusion and sustainable access to capital.
The paper observes the feasibility of implementing area yield insurance and weather insurance schemes for transferring financial risk and managing production risks. The objective included developing a composite insurance product based on normalized difference vegetation index (NDVI) and weather indices via a participatory approach; testing the yield loss estimation accuracy of such a product; and understanding people`s perceptions about the performance of the product.
The first part outlines the emerging trends in microinsurance, while the second looks at the insights that the Facility has gained over the past 4 years. The Annexes provide details on the Facility's partners, including grantees, and on the knowledge dissemination and professional development activities implemented during the year.
With the ushering of globalization era promoting investments in agricultural trade, the study of agricultural risk management has its immense value at present. Its usefulness lies in strengthening national food security and stabilizing farmer’s income under uncertain events ranging from production risks as well as market risks of agricultural commodities.
This document focuses on innovation in weather insurance designed to fit the special circumstances of lower-income countries where rural and agricultural financial markets are largely underdeveloped. Weather insurance is important to the long-term economic development of lower-income countries as a means of spurring rural finance and agricultural and rural development. Weather insurance can also help alleviate chronic poverty. The lack of access to weather insurance can cause rural and farm households in lower-income countries to consume their assets to survive an extreme weather event or their assets may be destroyed, throwing these households into a cycle of poverty with no means of recovery. To be clear, the lack of weather insurance may be only one of several constraints that are slowing progress in economic development and rural financial markets in lower-income countries.
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