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2018 DRR Financing 4.1 Olga Buto

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Agriculture Sector Disaster Risk Reduction and Management Financing - Global and Regional Perspectives

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2018 DRR Financing 4.1 Olga Buto

  1. 1. Session 4: The wider picture of risk transfer and development Agriculture sector Disaster Risk Reduction and Management Financing – global and regional perspectives 1 Olga Buto Disaster Risk Reduction Specialist Climate and Environment Division FAO
  2. 2. 2 Content ▪ Damage and loss from natural disasters in agriculture ▪ Trends in investment for Disaster Risk Reduction and Management in agriculture ▪ Risk transfer mechanisms in agriculture
  3. 3. 3 Damages and losses from natural disasters in agriculture 16% Disaster damage in agriculture 23% Disaster damage and loss in agriculture Source: FAO, 2018 30% 83% 11% 17% 4% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% VOLCANIC ERUPTION DROUGHT TSUNAMI FLOOD EARTHQUAKE STORM DAMAGE AND LOSS IN AGRICULTURE AS SHARE OF TOTAL DAMAGE AND LOSS ACROSS ALL SECTORS (2006–2016), BY TYPE OF HAZARD 31% Disaster loss in agriculture
  4. 4. 4 8% 4% 3% 36% 49% 0% 20% 40% 60% UNSPECIFIED FORESTRY FISHERIES LIVESTOCK CROP DAMAGE AND LOSS IN AGRICULTURE BY AGRICULTURAL SECTOR, PERCENTAGE SHARE OF TOTAL (2006–2016) Source: FAO, 2018 86% 4% 9% 1% DAMAGE AND LOSS TO LIVESTOCK SECTOR BY TYPE OF HAZARD (2006–2016) Drought Storm Flood Earthquake Damages and losses from natural disasters in agriculture
  5. 5. 5 Agriculture sector susceptibility to natural disasters in ECIS region 3% 3% 4% 5% 7% 21% 22% 35% Landslide Drought Other Wildfire Earthquake Storm Extreme… Flood 0% 10% 20% 30% 40% ECIS REGION DISASTER FREQUENCY IN 2000-2016 Ten top countries by four global indexes considering disasters and climate change 1.Tajikistan 2.Serbia 3.Russia 4.Bosnia and Herzegovina 5.Romania 6.Uzbekistan 7.Kyrgyzstan 8.Albania 9.Turkey 10.Turkmenistan Group of countries by actual agriculture sector susceptibility indicator 1.Uzbekistan 2.Armenia 3.Moldova 4.Cyprus 5.Tajikistan 6.Kyrgyzstan 7.Albania 8.Mongolia
  6. 6. 6 Investment in Disaster Risk Reduction and Management in agriculture The international efforts in assessing development aid allocation to DRR found out the following: ▪ Small proportion of humanitarian aid goes into disaster prevention and preparedness across sectors (OECD, 2017) ▪ Focus on DRR across sectors not specifying sub-division (GFDRR, 2015) ▪ DRR is a small fraction of development assistance (in 1991-2010 - with 66% to emergency response) (ODI, 2015) ▪ Between 2002-2014 about 13% of total adaptation finance targeted DRR (ODI, 2015) Apart from that - Foreign Direct Investment in agriculture sectors was relatively low – in period 1980-2006 has never exceeded 8 percent (FAO, 2012)
  7. 7. 7 Investment in Disaster Risk Reduction and Management in agriculture “Europe” region based on OECD data 5% 95% Total ODA to Humanitarian Aid Total ODA to all sectors 15% 85% Total ODA to Humanitarian Aid in agriculture Total ODA to Humanitarian Aid 84% 2% 14% TOTAL ODATO “HUMANITARIAN AID” IN AGRICULTURE Total ODA to Emergency Response in agriculture Total ODA to Prevention and Preparedness in agriculture Total ODA to Reconstruction, Relief and Rehabilitation in agriculture Preliminary FAO’s assessment results based on OECD data analysis
  8. 8. 8 $0 $50 $100 $150 $200 $250 $300 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total ODA to “HumanitarianAid” sector in agriculture in Europe in 2004- 2016 ($US million) ODA to Emergency Response in agriculture sectors ODA to Prevention and Preparedness in Agriculture incl. Flood Prevention and Control in Agriculture ODA to Reconstruction, Relief and Rehabilitation in Agriculture sectors $1.830 $7.633 $0.316 $0.316 $0.000 $0.000 $10.089 $0.000 $0.052 $0.257 $0.391 $1.528 $0.086 $0 $2 $4 $6 $8 $10 $12 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total ODA to Prevention and Preparedness in Agriculture incl. Flood Prevention and Control in Agriculture ($US million) Investment in Disaster Risk Reduction and Management in agriculture “Europe” region based on OECD data Preliminary FAO’s assessment results based on OECD data analysis
  9. 9. 9 83% 17% Total ODA to Emergency Response Total ODA to Emergency Response in agriculture 97 % 3% Total ODA to Prevention and Preparedness incl. Flood Prevention and Control Total ODA to Prevention and Preparedness in Agriculture incl. Flood Prevention and Control in agriculture 17% 83% Total ODA to Reconstruction, Relief and Rehabilitation Total ODA to Reconstruction, Relief and Rehabilitation in agriculture Investment in Disaster Risk Reduction and Management in agriculture “Europe” region based on OECD data Preliminary FAO’s assessment results based on OECD data analysis
  10. 10. 10 Risk transfer mechanisms in agriculture ▪ FAO encourage a comprehensive approach to risk management ▪ Mainstreaming financial instruments into agricultural sectors for addressing risks can be useful, but should be in accordance with the policies of each country ▪ Social protection, climate risk insurance and climate forecast-based financing, can help to shift the financial consequences of particular risks ▪ A number of case studies and pilot initiatives demonstrated potential and barriers of financial instruments for risk management in the agricultural sectors particularly in developing countries
  11. 11. 11 Risk transfer mechanisms in agriculture Ethiopia Project on Interlinking Insurance with Credit for Agriculture (EPIICA)  Risk-driven reluctance to invest in inputs such as fertilizer and improved seeds may be one of the major reasons for low crop yields in several countries in Africa  The obvious policy intervention to protect farmers against such risks would appear to be insurance indexed to local weather conditions  The results of the project in Ethiopia indicated that weather index insurance has a palliative rather than transformative effect, and protects farmers who already have relatively high rates of fertilizer use against risk Aquaculture insurance project inVietnam  To be successful the technical knowledge on aquaculture insurance of all stakeholders (i.e. farmers, players in insurance business and government officers) should be enhanced.  Coordination among agencies and units in the process of implementation is necessary to synchronize the work of advocacy, damage assessment and claim settlement  Effective risk management requires a coordinated multi-stakeholder approach.  Insurance subject should be incorporated in the high education system and research programmes, specifically those for developing innovative schemes suitable for small scale aquaculture Crop insurance feasibility study in Malawi  Index based risk transfer instruments should be considered as one of the component of a more comprehensive risk management strategy and should be designed in order to address specific weather risks  Weather insurance program is still at its very first stage both in terms of crops involved, area covered and modalities on how to link to insurance.  The construction of rainfall index to address or better prevent food crisis needs improvement to become operational There are continuous efforts taking place to address the specific barriers ranging from weather monitoring, observations and agriculturally relevant stress indices Source: FAO, submission to UNFCCC
  12. 12. 12 ▪ In-adequate weather monitoring ▪ Weather stations have traditionally been the primary data source for weather index insurance programs ▪ In many developing countries the number of weather stations is very limited ▪ Spatial interpolation techniques that can be used in some situations to solve the problem of low density of stations Agricultural Stress Index System (ASIS) ▪ However, these indices would need to be carefully calibrated locally ▪ Remote sensing index can work better in countries with semi-arid conditions ▪ With respect to weather station-based indices, a remote sensing-based index presents the advantage of exhaustive ground coverage ▪ On the other hand, rainfall estimates derived from remote sensing present the disadvantage of over/underestimating rainfall; in this case, vegetation indices may be useful as proxy for assessing the crop condition Drought early warning in Kyrgyzstan in 2014, using Agricultural Stress Index ▪ Analysis based on satellite imagery together with field reports indicated that vast areas in the northwest received below-average rainfall from February through July ▪ Coincides with crucial periods of crop establishment (spring wheat) and growth stages (winter crop) ▪ GIEWS analysis based on the Agricultural Stress Index (ASI), indicated that wheat yields in 2014 would be close to the low yields obtained in 2008 and 2012 when Kyrgyzstan was affected by serious droughts Risk transfer mechanisms in agriculture Source: FAO, submission to UNFCCC and GIEWS report
  13. 13. 13 Source: FAO, 2018 Access to predictable, sizable and regular social protection benefits can, in the short-term buffer exposure of poor households from the impacts of climate risks: ▪ Social protection can protect the poor from shocks, including erosion of productive assets and minimizing negative coping practices ▪ Function of social protection should be to install 'safety nets' - for example, by providing cash or food transfers or public works employment during periods of crisis, as an alternative to having poor households sell their productive assets to buy food. Risk transfer mechanisms in agriculture Safety nets In 2017, FAO provided a package in Somalia consisting of cash transfers, quality local seeds, land preparation and irrigation support, training and safe storage equipment. This helped families buy food and meet immediate needs while growing food over the medium- to longer- term. Forecast-based financing ▪ During the 2015–2016 El Niño,WFP’s Food Security Climate Resilience Facility used seasonal climate forecasts to trigger contingency funding for community- level resilience activities before the anticipated shock (drought) occurred, thereby helping preserve food security.
  14. 14. 14 Conclusion ▪ Agriculture sector is highly affected by frequency and intensity of natural hazards and disasters ▪ Investment in Disaster Risk Reduction and Management measures in agriculture is low ▪ Risk transfer mechanisms are needed, as can be part of the solution to achieve sustainable development of rural livelihoods
  15. 15. 15 THANK YOU

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