Emerging approaches in climate risk management in agriculture

Pramod Aggarwal, Pramod Joshi, Alok Sikka, Kolli Rao and others CGIAR Research program on Climate Change, Agriculture and Food Security

International Water Management Institute, New DelhiInternational Food Policy Research Institute

NICRA-Indian Council of Agricultural ResearchAgricultural insurance Company of India Limited

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India faces increasing challenges due to climatic risks

Frequent episodes of droughts, floods, cyclones, very heavy rainfall, heat waves, and frost in one or the other part of the country

Climate change will further increase such events

(Source: Erickson et al., 2011)

Increasing preparedness of Indian farmers to climatic risks: Regionally differentiated solutions needed

Recent developments in climate risk management

1. Improved crop insurance– Site specific weather indices– Community crop insurance

2. Climate smart villages for sustainable food security in risk prone regions

3. New tools to support developed of national and state level adaptation action plans and resource allocation

4. Climate analogues for farmer to farmer learning of risk management approaches

Only a fraction of non-loanee farmers avail crop insurance

Insurance knowledge limited with most stakeholders

Index insurance carries some ‘basis risk’, but most farmers believe the correlation between their losses and the crop insurance payments is not adequate

Delay in settlement of claims (delay in receiving harvest data of crops, funding issues)

AIC-CCAFS partnership on index insurance

• Weather Based Crop Insurance Scheme (WBCIS) since 2007 - Weather proxies for yield, implemented in 175 districts, covers most crops,

11.61 million farmers insured during 2011-12

• Problems of basis risk, although reduced, persisted. New indices for key crops developed for all agro-climatic zones

– further minimizing product basis risk using crop models and soil and weather databases

Rainfall triggers for rice, cotton, soybean, pearl millet, and corn Heat (high temperature) triggers for wheat, mustard and

chickpea Product testing during Kharif and rabi 2013

Objectives:Compensate farmers on the basis of actual crop loss at farm level (zero basis risk)Empowering the community to manage the programUse of technology for transparency, trust and to mitigate the risk of moral hazardQuick settlement of claimsFinancial literacyValue added services like agro-advisories and market prices

The process of community insurance

1. Organize farmers: – Cooperatives/associations/producer companies– Digital enrolment and geo-tagged, dated images of

the insured fields by a progressive farmer

2. Farmers notify any damage to crops to the cooperative within 24 hours

3. Loss assessment by the cooperative nominee within next 48 hours -supported by digital pictures and video footage

4. Claim to be released into the bank account of the insured farmer within a week, followed by ‘SMS’ notification

Climate smart villages/farms: Key interventions

Climate Smart Pulse Village

Goal: sustainable increase in pulse production and income of farmers•Linkage with Pulse village programs•Crowdsourcing for seed multiplication and distribution•Climate resilience enhancing interventions such as insurance, ICT based advisories, use of climate analogues