Download Summer 2015 Seasonal Climate Prediction for Agricultural

Impacts of climate change in Ethiopian
agricultural and the role of agricultural insurance
in disaster risk reduction and resilience
Jemal Seid
Climate and Geospatial Research Program
Africa-Asia Conclave on Loss and Damage Due to Climate Change
Instituting a global agricultural insurance programme as a risk-sharing and transfer
mechanism for developing countries
August 25-26, 2016 • Nairobi, Kenya
[email protected] , [email protected]
Outline
Agriculture and Climate Change in Ethiopia
The nexus between Climate, Agriculture and the Economy
Past Trends of Ethiopian Climate
What do climate projections tell about Ethiopia’s climate?
How does climate change impact Ethiopia’s agriculture?
Ethiopia's initiatives to respond to the challenges of CC
Existing DRM mechanisms, policies and system
Agricultural Risk factors and Mitigation Mechanisms in Ethiopia
Agricultural Insurance in Ethiopia: Best Practice, Challenges and Opportunities
Way forward
Agriculture and Climate Change in Ethiopia
Characteristics of Ag in Ethiopia
• Production
farmers:
dominated
by
smallholder
• >95% of all the farms
• Production is predominantly rainfed – only
4.5% of arable land is under irrigation
• Primary producers of agricultural production
• Directly employs over 80% of the labor force
• Low-input/low-output
• Low productivity (yield, labor)
• Spend about 60% of income on food
(AASR, 2014).
Challenges posed by CC
• adds to the exiting challenges
• making worse the tight resources
constraints
• more erratic
and extreme
weather patterns
• threaten food production
• Accelerate envt’l degradation
• increase vulnerability of SHHs
• accelerate rural poverty
The nexus between Climate, Agriculture and the Economy
Trends ofPast
Ethiopian
Climate
with
Respect to the
Trends of
Ethiopian
Climate
Global Climate Change
Historical Climate Variability (1982-2012)
Rainfall coefficient of variability(%)
Probability of failed seasons (%)
(EIAR,2015; Tesfaye et.al, 2014)
Historical rainfall trends
The linear seasonal rainfall trend (mm/decade) over 1978-2007
Belg season(FMAM)
Meher season (JJAS)
(Source: EPCC, 2015 ).
(Source: EPCC, 2015).
Historical temperature trends
The linear seasonal mean temperature trend (°C/decade) over 1981-2014
(Source: EPCC, 2015 ).
What does historical climate records tell us about drought frequency in Ethiopia ?
Source: Adapted from Tesfaye and Assefa (2010) and NMSA (1987)
Doc ID
What do climate projections tell about
Ethiopia’s climate?
Projected rainfall changes
2025-2049 : RCP 2.6
2025-2049 : RCP 8.5
Percentage Change = 2.95
Percentage Change = 4.67
14
12
14
10
12
Latitude [o]
10
6
8
4
2
6
0
4
Latitude [o]
12
8
6
5
10
4
8
3
6
2
4
-2
34
36
38
40
42
o
44
Longitude [ ]
Ensemble of 26 models
46
48
34
36
38
40
42
o
44
46
48
Longitude [ ]
: Source: EIAR, 2015
Projected temperature changes
2025-2049 : RCP 2.6
Source: EIAR, 2015
2025-2049 : RCP 8.5
Ensemble of 26 models
Doc ID
How does climate change impact Ethiopia’s agriculture?
Impact on Agricultural Water Resources
20
A1B
AET (%) 2046-2065
AET (%) 2080-2100
15
-0.5
5
-1
0
A1B
A1B
A2
A2
B1
-1.5
B1
0
-10
-5
-20
-10
Ground water (%) 2046-2065
Ground water (%) 2080-2100
Soil water (%) 2046-2065
Soil water (%) 2080-2100
A1B
0
-40
B1
0
10
-30
A2
A2
B1
-15
Stream flow(%) 2046-2065
-20
Stream flow(%) 2080-2100
Impacts on Crops: Maize
CSRIO -2050
MIROC-2050
Tesfaye et al., 2015
Tef suitability changes
2020-A2a
2050-A2a
11
%
1
7
%
12
%
2020-B2a
1
1
%
2050-B2a
Evangelista et al. 2015
Sorghum suitability changes
2020-A2a
7
%
2050-A2a
7
%
Evangelista et al. 2015
2020-B2a
12
%
2050-B2a
3
%
Barley- suitability changes
2020A2a
2050A2a
2020-B2a
31
%
46
%
36
%
2050-B2a
3
7
%
Evangelista et al.
2015
Impact on Crop Disease and Pests
• At a global scale, pests and diseases attribute to an average yield loss of 18% and 16%,
respectively in major crop species (IPCC, 2014)
• Climate change will alter potential losses to many pests and diseases as changes in
temperature can result in geographic shifts through changes in seasonal extremes
 Example, wheat rust risk responds to ENSO events
• Climate change may also influence the migration of agronomic and invasive weeds
species
Impact on Livestock
• Pastures and forage crop production and quality;
availability and price;
• Change in range conditions,
• Change in water availability,
• Changes in the distribution of livestock diseases and
pests (e.g. tsetse fly infestation increase);
• the direct effects of weather and extreme events on
animal body conditions such as health, growth and
reproduction (Smith et al. 1996;
Ethiopia's initiatives to respond to the challenges of CC
Existing DRM mechanisms, policies and system
• The Government of Ethiopia (GoE) has a strong political commitment to respond to prevailing and
emerging challenges of climate change and disasters.
 new national policy on Disaster Risk Management developed with the implementation plan
 National Disaster Risk Management Commission (NDRMC) established
 The structure and content of this policy and approach is a first for Africa and Ethiopia has shown constructive
leadership in this area. (ACCRA,2016).
• National Policy and Strategy on Disaster Risk Management
 Full DRM cycle – prevention, mitigation, preparedness, response, recovery and rehabilitation
 Aligned with the Hyogo Framework for Action
 Shift in orientation from crisis management to a multi-sectoral and multi-hazard DRM
approach
 Informed decision making based on strong risk assessments and early warning system
 Legal backing with proper institutional structure
 Linkages to Other Polices and Strategies (PASDEP, GTP, The Agriculture Sector Policy and
Investment Framework (PIF), CRGE, and others,. …
(GoE, NDRM Policy, 2014)
22
The role of risk transfer and insurance in disaster risk reduction
and climate change adaptation
Past experience
Agricultural Risk factors and Mitigation Mechanisms in Ethiopia
Agricultural crops are
susceptible to a
variety of risks
•
•
•
•
•
•
•
•
recurrent drought
pest and diseases outbreak
extreme weather condition (temperature, rainfall)
flood, frost, fire, wind, hail,
land degradation,
transportation problem,
price fluctuation
market problem etc.
causing
either
• yield reduction at farm level
• value of crop losses at market level.
• ………
Traditional Approaches
a farmer sow his
small land with
different types of
crops
Risk smoothing:
a land tenure
systems locally
called ‘Yekul’
Risk sharing:
Ex-ante
iddir, a burial
society,
Productive Safety
Net Program
(PSNP) – Gov’t.
Traditionally selling
of animals and
other productive
assets
Equb, a savings
organization, help
households cope
with unexpected
expenses.
Informal institutions
such arrangements
usually inclined to focus
on humanitarian and short
term assistances.
The gov’t also address
through emergency
assistance provided via
Disaster Prevention and
Preparedness
Commission (DPPC) as a
relief work.
Post ante
The most widely used traditional ex-ante and post ante risk mitigation mechanism by
small holder farmers
Weather Insurance In Ethiopia-The Pilot Projects
Macro Level Index Insurance
2006: WFP has introduced & piloted a Macro level weather risk insurance to address the
impact of weather risk shocks through market mechanism as an ex-ante measure
The first National Index based
Insurance
Premium amount US$ 930,000.
= European reinsurer AXA Re
according to WFP, the pilot project has evidenced the fact that
transferring catastrophic risks to global market is possible within the
Ethiopian context.
Targeted 5 million people.
The project had utilized an index derived
from 10 years of rainfall data from 16
weather stations across Ethiopia.
• 80% correlation between rainfall levels and the
number of food aid beneficiaries in each year,
suggesting that rainfall is a reliable objective
indicator of drought-triggered vulnerability and
social assistance needs.
Indeed as the pilot did not involve local insurers, no lesson was learned by the
industry players in the market.
(Devereux and Guenter, 2007; Balzer and Hess, 2009)
Weather Insurance In Ethiopia-The Pilot Projects
Micro Level weather index insurance: Case study
Alaba (2008), Southern region
Bofa, WICI (2009), Oromia
Region
Adi ha WICI (2009), Tigray
Region
The world Bank and Ethiopian Insurance
Corporation (EIC) has piloted a weather
index insurance in 2008.
Nyala Insurance S.C. (NISCO) in
collaboration with the WFP
Dedebit MFI – took part in the
designing & marketing process as well
as advancing the premium payment
Target group:
26 smallholder farmers are Insured.
However the number of Insured farmers has
reduced by more than 50% in the following
years and did not picked up from there.
• 137 Small holder farmer with average land holding size of 0.5
hectares
• These farmers are members of the Lume Adama Farmers
Cooperative Union (LAFCU) and
• mainly growers of Haricot bean, Teff and Cereals
Premium: purchased by Lume Adama
Cooperative Unions for their members
covering 159.75 hectares of haricot beans.
Oxfam America and the Colombia University
have played a major role in designing and
coordinating this satellite data based WICI
pilot.
Target group: 200 farmers
• Horn of Africa Risk Transfer for Adaption Program (HARITA)
 Oxfam, with funding from The Rockefeller Foundation,
 partnered with Swiss Re,
 The International Research Institute for Climate and Society (IRI),
 The Relief Society of Tigray,
 Dedebit Credit and Savings Institution,
 Nyala Insurance Company, and Africa Insurance Company
 Developed a weather index insurance based on advanced satellite technology
 More than 12,200 farmers in 45 villages in Northern Ethiopia will benefit from
drought protection.
 In 2012 year's drought conditions each farmer receive a share of the total
$322,772 in payouts offered through HARITA to help cover crop losses.
 It’s was the largest Weather Index Insurance Payout for Small Scale African
Farmers Triggered by Satellite Technology.
https://www.oxfamamerica.org/
Other pilots in Ethiopia
Linking formal and
informal insurance –
iddirs
IFPRI-Oxford-BG/OIC
Linking credit with
insurance
UC San Diego – EEA –
FAO - Nyala/Dashen
Insuring livestock in
(agro-) pastoralist
areas
Index-Based Livestock
Insurance for Pastoralist
(IBLI)
Cornel - ILRI- OIC
Pilot between 2011 and
2014 in Dodota,
Shashemene, Bako areas
Very little uptake even
when subsidized
Uptake is significant but
the adoption rate is very
low
Best practice
• In the face of climate change, piloting diversified adaptation techniques,
including crop insurance, is one of the coping strategy that GoE is
helping to introduce in order to reduce the vulnerability of smallholder
farmers in Ethiopia who are totally dependent on erratic rainfall and
crop failure.
• In late October 2015, a total of 12,000 smallholder farmers in four
regions started to benefit from Ethiopia’s first weather index
insurance claims payment to cover the loss for this year’s crop failure
due to El Nino.
 The weather index insurance claims paid out 2.6 million ET birr covering a
total of around the selected smallholder farmers in Oromia, Gambella,
Benishangul Gumuz and Tigray regions.
• In March, 2016 launched a new crop insurance that covers 15 million
smallholder farmers in five years based on vegetation index.
 The national level vegetation index based crop insurance aims to insure the
farmer against weather related risks. Labeled Normalized Difference
Vegetation Index (NDVI), the new insurance uses a long standing index used
by national and international agencies to monitor the occurrence of drought.
(PFEA; EIC; ATA, 2016)
Challenges and opportunities
Opportunities
Challenges:
•
•
•
•
•
•
•
•
Farmers lack awareness on agricultural insurance
Legal and regulatory framework not yet implemented
Lack of reliable data to analyze risk:
Inadequate capacity building work for private
insurance companies, cooperatives and MFIs
Limited financial capacity
Lack of banking credit (loan) to the smallholder
farmers
Limited range of Micro-insurance products
High administrative costs of agricultural insurance
• Government policy
• Commitment of NGOs
• Establishment of reinsurance companies
domestically
• Continuing recent research endeavour
Way forward
• Aggressive nationwide campaign to create awareness about the
product among major stakeholders mainly by the concerned
government organs and International Agencies are required.
• Building on the already established reliable delivery channel by
focusing on capacitating cooperative unions, MFI …..
• Availing quality weather data (both historical and real time)
• Strength collaboration and partnership between Government, NGOs,
domestic insurers, farmer cooperatives/microfinance and bankers
• Strengthening and capacitating the existing crop insurance products
• The product needs a detailed legal framework which includes
regulations governing the development and operation of micro
insurance products.
Thank your for
attention
[email protected] , [email protected]