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Dan Osgood: Insurance to incentivise update of agricultural technologies


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Presentation by Dan Osgood, Lead Scientist, Financial Instruments Sector Team, International Research Institute for Climate and Society (IRI), at the Scaling up agricultural adaptation through insurance conference, on the sidelines of SBSTA.

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Dan Osgood: Insurance to incentivise update of agricultural technologies

  1. 1. Index Insurance and Satellites: the IRI Perspective Daniel Osgood, Lead Scientist Financial Instruments Sector Team Insurance to incentivise uptake of agricultural technologies Presented by: Daniel Osgood, Lead Scientist Financial Instruments Sector Team SBSTA46, Bonn, Earth. May 2017
  2. 2. Index insurance and Agricultural Technology Uptake Climate change: more bad years Adaptation: increase productivity in normal years to cover bad year loss But strategies that increase productivity in most years face increased risk in bad years Threat of 1 drought year out of 5 prevents other 4 from being much more productive Key to uptake is to relax risk of bad year to unlock productivity options Different, complimentary examples Individual, bank, meso, macro
  3. 3. Why index insurance? Insurance: reduce risk to unlock productivity But problems with traditional insurance have made it tough to implement High costs of managing risk for chances you already take Recent innovation Insure weather index eg: provide pay if there is drought Easy to get wrong-important to get right Most index insurance projects do not do well But some do succeed
  4. 4. IRI FI Sector Team and Insurance IRI has been working for over a decade of research, education and technical support index insurance projects We support most of the index insurance projects that have gone to large scales We support dozens of projects across Africa, Latin America, and Asia, with several hundreds of thousands of farms purchasing indexes we have helped build Some intergalactic partners: CCAFS, USAIDe3, WFP, OXFAM, WB/IFC, Kilimo Salama/ACRE, UN-ILO, NASA, TAMSAT, NOAA, SWISSRe, MunichRe, USAID, FEWSNET, Syngenta Foundation, Pula
  5. 5. Games, exercises, formal farmer leadership
  6. 6. Software (and experts) process farmer and satellite data
  7. 7. Games to train, elicit risks and farmer opportunities
  8. 8. Games for farmer input in quantitative contract analysis/design
  9. 9. Games as Experimental economics research (dry-run)
  10. 10. Farmer’s, Uptake, Technology sandwich Seasonal Monitoring and index design Does the evidence agree? Met offices, Farmers, Satellite rainfall, Soil Moisture, Veg, Crop models, Crop cycle, yield Materials that take everyone through each step, built together: Validate, improve insurance, sync actions Link to disaster preparedness/response
  11. 11. Science Based, Farmer Driven Index insurance can do well-if useful for client WFP/Oxfam R4 Ethiopia, Senegal, Malawi, Zambia (w/IRI) Tens of thousands of farmers individually choosing to purchase insurance in holistic package, Farmers choose more per acre than American farmer Impacts: Increased fertilizer and seeds Female headed households especially benefit Increased wealth $20 to $40 insurance payments gave $100 to $150 more oxen and savings wealth ACRE family Kenya, Rwanda (w/IRI) Hundreds of thousands of farmers Seed guarantee model-improves production WFP Africa Risk Capacity (ARC)-National Level protection in Africa Mongolia World Bank, Kenya Livestock IBLI/World Bank, GIIF, PG, CCRIF India: Tens of Millions of farmers, mixed results New, bottom up projects appearing across Latin America (w/IRI) CRII Dominican Republic, CCAFS Honduras, Uruguay, Chile
  12. 12. Thanks!