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Integrating Seasonal Forecasts and Insurance for Adaptation among Subsistence Farmers: The Case of Malawi

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Publication date
18/06/2008
Number of Pages
30
Language:
English
Type of Publication:
Working Papers & Briefs
Focus Region:
Sub-Saharan Africa
Focus Topic:
Climate / Weather / Environment
Type of Risk:
Weather & Climate related
Type of Risk Managment Option:
Risk transfer
Commodity:
Crops
Livestock
Author
Daniel E. Osgood, Pablo Suarez, James Hansen, Miguel Carriquiry, Ashok Mishra
Organization
The World Bank

Climate variability poses a severe threat to subsistence farmers in southern Africa. Two different approaches have emerged in recent years to address these threats: the use of seasonal precipitation forecasts for risk reduction (for example, choosing seed varieties that can perform well for expected rainfall conditions), and the use of innovative financial instruments for risk sharing (for example, index-based weather insurance bundled to microcredit for agricultural inputs). So far these two approaches have remained entirely separated. This paper explores the integration of seasonal forecasts into an ongoing pilot insurance scheme for smallholder farmers in Malawi. The authors propose a model that adjusts the amount of high-yield agricultural inputs given to farmers to favorable or unfavorable rainfall conditions expected for the season. Conclusions highlight the potential of this approach for adaptation to climate variability and change in southern Africa.