[Event Recap] Webinar 1: Index-based Livestock Insurance and the State of Global Evidence | Disaster Risk Financing Solutions for Climate-resilient Livelihoods in the Agricultural Sector
The “Disaster Risk Financing Solutions for Climate-resilient Livelihoods in the Agricultural Sector” knowledge series was launched on June 7, 2023. This knowledge series builds on the success of the first knowledge series, ‘Strengthening Financial Resilience in Agriculture’ that was delivered virtually in 2021-2022 (click here for more information).
The first webinar, in this series of four webinars, focused on “Index-based Livestock Insurance and the State of Global Evidence". The webinar aimed to educate participants on the history and rationale behind index-based livestock insurance (IBLI), the current state of evidence, and the evolving research agenda aimed at bridging the evidence gap. Additionally, the webinar shed light on the impact and implications of index insurance for practitioners and policymakers.
In their opening remarks, Olivier Mahul (Practice Manager, Crisis and Disaster Risk Finance, World Bank Group), and Lara Evans (Social Protection Advisor, United States Agency for International Development [USAID]) emphasized the growing role of financial inclusion in enhancing the resilience of farmers, global economies, and the entire agricultural value chain in the face of climate change. They also highlighted the importance of disaster risk financing, including index-based insurance, in effectively addressing the climate change-related challenges of the 21st century.
The opening remarks were followed by a recap of the previous knowledge series, i.e., ‘Strengthening Financial Resilience in Agriculture’ by Qhelile Ndlovu (Financial Sector Specialist, Crisis and Disaster Risk Finance, World Bank Group), which highlighted the following three key messages from the series.
- Key message 1: There is a wide range of market-based solutions available that cater to different risk levels and population segments.
- Key message 2: The evolution of digital technologies has facilitated advancements in agricultural insurance, enabling the development of index-based insurance and making it more affordable and accessible. However, the challenge of basis risk persists.
- Key message 3: International experiences have demonstrated that delivering solutions at scale requires robust public-private partnerships to effectively address and sustainably overcome market failures.
Following the recap, Chris Barrett (Stephen B. and Janice G. Ashley Professor of Applied Economics and Management, Cornell University) delved deep into the origins and impact of index-based livestock insurance (IBLI) during his presentation. He elucidated the reasons behind its adoption and how it offers partial yet valuable coverage against herd loss, ultimately resulting in a positive impact on its purchasers. Furthermore, IBLI shows promise in addressing the poverty traps that arise from catastrophic drought risks.
Michael Carter (Distinguished Professor of Agricultural and Resource Economics at the University of California, Davis, and Director of the Feed the Future Innovation Lab for Markets, Risk, and Resilience) elaborated on the definition and utilization of economic measures to assess the quality of index insurance contracts. Using East Africa as an example, he demonstrated that optimizing insurance zones can significantly improve the value of index-based livestock insurance.
The final presentation of the webinar was delivered by Karlijn Morsink (Associate Professor of Economics, Utrecht University School of Economics), who presented a review of the literature, focusing on the impacts of index insurance on household welfare. She concluded that a sustainable and gradually expanding insurance market can only be achieved if these products genuinely improve the welfare of consumers. Research shows that the conditions under which insurance take-up can be used as a measure of welfare are difficult to obtain; therefore, measuring a portfolio of welfare measures, some at a larger scale and some at a smaller scale, is the optimal research strategy. She emphasized the need for collection of data on product and infrastructure quality, investments in consumer education, and monitoring consumer satisfaction and basis risk.
The presentations were followed by an engaging question-and-answer session. The event which was facilitated by Qhelile Ndlovu saw over 420 registrations and was attended by over 300 participants, including practitioners and policymakers.
About the Webinar Series:
The ‘Disaster Risk Financing Solutions for Climate-resilient Livelihoods in the Agricultural Sector Webinar Series’ aims to further deepen knowledge on agriculture insurance, and enable global knowledge exchange and collaboration among practitioners, technical counterparts, and policymakers of developing countries in designing and implementing disaster risk financing for agriculture. The series will comprise four webinars delivered 4-6 weeks apart. Each webinar will be accompanied by a detailed fact sheet summarizing the key learnings from the webinar. The webinar series offers a chance to achieve a World Bank-endorsed participation certificate.
Click here to download the webinar fact sheet:
Watch the recording of the webinar here.
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