Dealing with climate effects on agriculture in Africa
Seeds of Change
By STEPHAN FARIS | Monday, Sept. 24, 2012 | TIME
The Tigray region in the Rockstrewn highlands of northern Ethiopia isn't the type of place where you'd expect to find an innovative financial product. Its residents are mostly farmers, poor and vulnerable to crop failure resulting from persistent droughts. That's precisely why the region has been chosen to serve as a test range for a new kind of insurance that could help poor countries cope with climate change.
The idea is simple. Instead of relying on food aid to help farmers after drought has hit, aid agencies can sign them up for crop insurance before disaster strikes. When the rains fail, a farmer can use a crop-insurance payout to buy food without dipping into the assets needed for the next planting. "It allows you to smooth out your income," says David Waskow, director of the climate-change program at Oxfam America, which is coordinating the project. "Otherwise, you can fall off a cliff."
The project in Ethiopia is the latest step in the insurance industry's long fight to build a business case that accounts for global warming. Its efforts took on a new urgency after the 2004 and '05 hurricane seasons. By the time the waters had drained away, the industry found itself faced with claims for $81 billion in insurance compensation, up from $2.2 billion during the previous two years. "The world after Hurricane Katrina has been a different one," says Peter Hppe, head of the Geo Risks Research division of the German reinsurance giant Munich Re. The surge in claims pushed insurers to account for more unpredictable weather, and premiums have risen in turn. As Andreas Spiegel, Swiss Re's senior climate-change adviser, puts it, "Insurance sets a price tag on climate change."
(Continued here.)
By STEPHAN FARIS | Monday, Sept. 24, 2012 | TIME
The Tigray region in the Rockstrewn highlands of northern Ethiopia isn't the type of place where you'd expect to find an innovative financial product. Its residents are mostly farmers, poor and vulnerable to crop failure resulting from persistent droughts. That's precisely why the region has been chosen to serve as a test range for a new kind of insurance that could help poor countries cope with climate change.
The idea is simple. Instead of relying on food aid to help farmers after drought has hit, aid agencies can sign them up for crop insurance before disaster strikes. When the rains fail, a farmer can use a crop-insurance payout to buy food without dipping into the assets needed for the next planting. "It allows you to smooth out your income," says David Waskow, director of the climate-change program at Oxfam America, which is coordinating the project. "Otherwise, you can fall off a cliff."
The project in Ethiopia is the latest step in the insurance industry's long fight to build a business case that accounts for global warming. Its efforts took on a new urgency after the 2004 and '05 hurricane seasons. By the time the waters had drained away, the industry found itself faced with claims for $81 billion in insurance compensation, up from $2.2 billion during the previous two years. "The world after Hurricane Katrina has been a different one," says Peter Hppe, head of the Geo Risks Research division of the German reinsurance giant Munich Re. The surge in claims pushed insurers to account for more unpredictable weather, and premiums have risen in turn. As Andreas Spiegel, Swiss Re's senior climate-change adviser, puts it, "Insurance sets a price tag on climate change."
(Continued here.)
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