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

Understanding poor people'’s experiences in climate change adaptation.
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This paper explores the integration of two different methods of addressing climatic vulnerability in an ongoing pilot insurance scheme for smallholder farmers in Malawi.

Climate variability poses a severe threat to subsistence farmers in southern Africa. Two different approaches are used to address these threats:

  • Seasonal precipitation forecasts for risk reduction - for example, choosing seed varieties that perform well for expected rainfall conditions;
  • Innovative financial instruments for risk sharing - for example, index-based weather insurance bundled with microcredit for agricultural inputs.

So far these two approaches have remained separate. This paper proposes a model that adjusts the amount of high-yield agricultural inputs given to farmers to favorable or unfavorable rainfall conditions expected for the season. Simulation results indicate that this approach:

  • Substantially increases production in years when droughts are unlikely;
  • Reduces losses in years when insufficient rainfall damages crops;
  • Results in cumulative gross revenues that are twice as large for the proposed scheme;
  • Results in wealth accumulation that reduces farmers’ long-term vulnerability to drought;
  • Demonstrates high potential for adaptation to climate variability and change in southern Africa.

About this Publication

By Osgood, D., Suarez, P., Hansen, J., Carriquiry, M. & Mishra, A.