Global Goal 13: Climate Action and more support for small farmers

22 Sep 2015

As the new set of Sustainable Development Goals are launched this week in the U.N. it is clear that they will only be achieved if the effects of Climate Change are controlled. It is already too late to halt much of the damage caused by climate change and the need to adapt to the changing climate – to become climate resilient - has become increasingly evident. Many of the successes in global development are at risk as droughts increase, crop yields become more volatile and vulnerable populations are left without food security. Through our work on undernutrition RESULTS has worked for many years with small farmers groups. Small farmers, often working on marginal land, are most at risk of changing climate. An innovative new approach to family, Climate Risk Insurance, has emerged as a lifeline for millions of poor farmers without access to traditional financing. Insurance against risk for family farms can be an economic driver for developing countries, and RESULTS is determined to ensure that this issue is on the agenda at the U.N. Climate Conference (COP21) in Paris this December. Senior aid officials believe Climate Risk Insurance has the potential to improve the lives of 400 million small farmers in the poorest countries. The G7 Initiative for Climate Risk Insurance In March 2015 at the G7 summit in Germany, Minister Müller of the German Development Ministry (BMZ) put forward the ‘G7 Initiative on Climate Risk Insurance. He announced Together with the G7 and our partner countries we want to provide up to an additional 400 million poor people with insurance against the risks of climate change by 2020’. The total amount of money required has yet to be finalised, but Germany begun the process by pledging €150 million towards climate risk insurance, and have called for other G7 nations to contribute. According to a BMZ report released alongside the launch of the G7 Initiative, if we are to provide coverage for 400 million more people by 2020, a comprehensive approach will be required to extend the initiative to the global scale: ‘Climate risk insurance is a vital instrument within a comprehensive climate risk management system’. What will this system involve and how will it be successful? Government and Private Sector Investment The initiative will rely on strong G7 government support, Domestic Resource Mobilisation from developing nations, and large scale private sector investment. According to Ingrid-Gabriela Hoven, director general of global issues at BMZ, "It is do-able. We are not speaking about amounts of money that are out of reach," Hoven said the German contribution of €150 million was "seed money" to motivate involvement by the private sector. She also said that other G7 nations have indicated they will provide funding. The UK Government has already provided funding for successful regional projects such as the African Risk Capacity (ARC), and now has an opportunity to make a strong contribution to global climate change adaptation by pledging significant funds towards this initiative on at COP21 in December. Keeping Premiums Low Enough for The Poorest through Parametric-Based Insurance Triggers Traditional insurance in developing countries has been uneconomic because of the small size of farms, long distances and bad roads. ‘Micro-insurance’ is an approach that aims to work with small farmers in the developing world. It has been limited by many factors such as the lack of good infrastructure, data, claims adjustors, and the inability to process payouts quickly enough to safeguard the client. But now a new innovative approach is being rolled out - parametric based insurance. This approach uses publicly available data, e.g. the level of rainfall over a given time, to trigger payouts. Companies such as Swiss Re have invested heavily in these parametric measures. Nickil Lobo, Senior Vice President at Swiss Re has said “In emerging markets we need to step outside traditional mechanisms for handling co-insurance." Parametric triggers are a means to spread risk across multiple markets, and thus can become attractive to the private sector Scaling up Existing Programs Several regional micro-insurance programs already exist with support from donor countries and public-private investment coalitions such as the Micro-insurance Catastrophe Risk Organisation (MiCRO). For example African Risk Capacity (ARC) is funded in part by the UK government and German loans and run by the African Union, and provides insurance in Niger, Senegal, Mauritania and Kenya. In 2014 ARC paid out $26 million after three West African states suffered low rainfall. ARC has proved that by providing timely payouts (within 4 weeks) to clients in the event of a catastrophe, money spent is worth 4 times more than ad-hoc disaster relief aid which often arrives too little, too late. Simon Young, CEO of ARC has emphasised the need for increased investment in initiatives such as ARC in order to reach vulnerable, uninsured populations: “Most initiatives are limited in how much they can afford to pay and how much capacity they have to distribute a payout - so that’s where we need support from the G7 focus." Goal-13-V3-640x635 RESULTS UK is now opening a new programme area to research and promote Climate Risk Insurance. We are now building our contacts with allies and partners to collaborate with, and are recruiting a Policy Advocacy Officer to lead this work. Please share this information with any contacts who may be interested.

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Naveed Chaudhri

Head of Campaigns

Naveed Chaudhri is the Head of Campaigns. Naveed’s passion is to help build grassroots campaigns networks to increase public support for improving the lives of people in poor communities. Previously working at Oxfam and VSO, he has long experience managing activism and campaigning programmes,...

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