Achieving zero hunger through integrated climate risk management

Most of the world’s hungry people live in countries prone to weather-related risks, which disproportionately affect their lives [1]. Mathieu Dubreuil and Arianna Tabegna of the World Food Programme (WFP) highlight how microinsurance can help tackle food insecurity when combined with other interventions for climate risk management. By courtesy of Micro Insurance Network

Mathieu Dubreuil is Insurance Advisor in the Climate and Disaster Risk Reduction Programmes Unit of the World Food Programme.

 

Arianna Tabegna is Programme Policy Consultant in the Climate and Disaster Risk Reduction Programmes Unit of the World Food Programme.
Food insecurity can be defined as “the lack of secure access to sufficient amounts of safe and nutritious food for normal growth and development and an active and healthy life”. [2] Food security requires three stable conditions: availability, access and use. In other words, food must be regularly available in sufficient quantities and diversity, and have a positive nutritional impact.

Conflict and extreme weather events are major drivers of hunger. In eastern and southern Africa, prolonged drought has played a significant role in consecutive poor harvests and has exacerbated already high levels of food insecurity. [3] The World Food Programme (WFP) aims to achieve Sustainable Development Goal 2 (SDG2) of zero hunger by collaborating with partners to test and scale up innovative ways of providing rapid assistance to the poorest and most vulnerable farmers after a shock, helping them to become more climate resilient and food-secure. [4]

Index insurance is one such innovation. It allows quick payouts to farmers if the index falls below a pre-determined threshold, thus supporting protective and transformative progress towards SDG2. Index insurance is considered a powerful tool for smallholders to help them manage climate risks and achieve resilient livelihoods, while also enabling investments and growth in the agricultural sector. [5] Insurance can achieve greater impact by addressing and reducing the risks to which farmers are exposed, and providing support for investing in more productive activities.6 It can also help overcome the underlying vulnerabilities that hinder farmers’ resilience and food security. However, given the complexity and costs of insurance, it is essential to combine it with other complementary services in an integrated risk management approach. [7]

Insurance as a protective and transformative tool

During bad years, farmers have to sell productive assets, resulting in long-term negative impacts on their food security. Payouts can help farmers to cover their immediate food needs while protecting their livelihoods, assets and investments. [8] For example, area yield index insurance payouts triggered in Kenya through the R4 Rural Resilience Initiative [9] helped farmers to access food during the lean season. As Figure 1 shows, one month after a payout to 963 farmers, a survey of 124 recipients found that 85% of households bought food, 39% bought livestock, 29% bought agricultural inputs and 31% used the funds to pay school fees. The payout helped mitigate against food insecurity after a failed agricultural season and reduced the erosion of livelihoods through the purchase of productive assets.

Besides acting as a social protection mechanism, insurance can also play a long-term transformative role that helps to lift people out of poverty. As one R4 participant in Malawi said, “This year, I engaged in farming with a very positive mind knowing that if my crops failed because of drought, I would be supported by insurance compensation and not be desperate to find food”.

By reducing uncertainty, insurance encourages farmers to invest in planting crops in more fields, or buying assets such as fertilisers, seeds or new agricultural technologies that can increase their productivity in non-payout years. At the same time, insurance facilitates access to financial services including credit, which support productive investments and can help to achieve sustainable livelihoods. [10,11] In Ethiopia, R4 insured farmers have increased their saving and borrowing, as well as diversifying their income sources away from cereal crops. [12]

 

Figure 1: Type of expenditure of survey recipients

Insurance in an integrated approach

WFP’s integrated approach in Malawi is aimed at food-insecure smallholder farmers who live in shock-prone areas and who cannot purchase insurance. The insurance product is built into national productive safety nets so that farmers can access weather insurance by investing their time in building assets that reduce their vulnerability over time. From the second year, farmers start paying part of the premium in cash. Over the long term, thanks to the combination of services offered to them, they will be able to transition from the safety net programme into the commercial market for financial services.

WFP has been working in Malawi since 2015 under the R4 Initiative to build farmers’ resilience against climate shocks and to improve food and income security by integrating asset creation, weather index insurance, financial and climate services. Together, these tools help farmers face climate shocks and protect them by reducing the risk and transferring part of it to the financial market. At the same time, farmers are supported in building up savings, taking calculated risks to diversify their livelihoods and accessing microcredit. This in turn helps to address the country’s structural challenges such as poor access to inputs, assets and financial services. [13] Participation by highly food-insecure smallholders who are dependent on rain-fed agriculture in shock-prone areas has increased significantly from 500 to more than 10,000 farmers. Of these, 7,000 received payouts totalling around US$400,000 following dry spells. [14]

Despite erratic weather over the last three years affecting the already vulnerable population, [15] preliminary findings of the programme monitoring system demonstrate that the integrated approach has improved food and income security and brought about positive changes for participants. This analysis is based on panel data obtained from regular quantitative surveys conducted in May 2015 and 2017 and qualitative surveys of over 134 participating households in Balaka District. This allows comparison of the effects of the interventions over time and on the same groups. The evolution of participants was compared with a randomly selected control group of 92 households not participating in the integrated approach, allowing direct attribution of the effects to the intervention.

Results are encouraging. Figure 2 shows how the participants’ food consumption score (FCS) [16] has increased since 2015. The number of households with a poor to borderline FCS decreased from 41% to 11%. R4 participants showed an improvement in their food security status that was higher than non-participating households. Overall dietary diversity improved: [17] households with low dietary diversity halved and households with medium dietary diversity increased by 35% from the baseline.

These positive trends are mirrored by a reduction in negative consumption coping strategies. Participants are now better able to meet their needs without having to resort to extreme measures such as relying on less nutritious, cheaper food or reducing the number of meals they eat each day. Farmers also grew more diversified crops during the 2016/17 agricultural season. Increased or stable productive assets owned by households is a sign of improved resilience. Households also reduced the amount they spent on food – a good indication of declining vulnerability levels – freeing up half their income to invest in family well-being.

With increased food security, farmers can focus on increasing their productivity and investment capacity through savings groups, access to credit and climate services. Indeed, participants are saving more – 47% more through savings groups or associations and 7% more through informal saving methods. They also doubled their access to credit compared to 2015, mostly for health expenses (32%), food consumption (21%) and income-generating activities (18%).

These encouraging results show that microinsurance can help to achieve zero hunger when used alongside other tools that reinforce each other in an integrated approach to help manage risks.18 WFP is also exploring integration with market access support, which would provide further incentives for production, ensure the sustainability of investments and allow farmers to become more competitive in the commercial market.

[1] World Food Programme (WFP), Two Minutes on Climate Change and Hunger: A Zero Hunger World Needs Climate Resilience, WFP, November 2017. Available at https:// docs.wfp.org/api/documents/WFP-0000009143/ download/?_ga=2.133932750.1925273523.1531914364- 1998928681.1525071119, accessed on 16 April 2018.

[2] Food and Agriculture Organisation (FAO), The State of Food Insecurity in the World 2013, (Rome: FAO, 2013). Available at http://www.fao.org/docrep/018/i3434e/i3434e.pdf, accessed on 6 September 2018.

[3] World Food Programme (WFP), Global Report on Food Crises 2018. Available at https://www.wfp.org/content/global-report-food-crises-2018, accessed on 6 September 2018.

[4] Choularton, R., Weather Index Insurance: A Powerful Tool Against Hunger (WFP, 2015). Available at https://www. wfp.org/stories/weather-index-insurance-powerful-tool-against-hunger, accessed on 6 September 2018.

[5] Climate Change, Agriculture and Food Security (CCAFS), Scaling up index insurance for smallholder farmers: Recent evidence and insights, (CCAFS, 2015). Available at https://cgspace.cgiar.org/bitstream/handle/10568/53101/CCAFS_Report14.pdf?sequence=1, accessed on 6 September 2018.

[6] International Fund for Agricultural Development (IFAD) and World Food Programme (WFP), Potential for scale and sustainability in weather index insurance for agriculture and rural livelihoods, (IFAD and WFP, 2010). Available at https://documents.wfp.org/stellent/ groups/public/documents/newsroom/wfp281391. pdf?_ga=2.37985312.2069101315.1535614608- 1998928681.1525071119, accessed on 6 September 2018.

[7] Dubreuil, M. and Tabegna, A., “An integrated risk management approach against climate risks: The R4 Rural Resilience Initiative in Senegal,” in The State of Microinsurance 2017, (Microinsurance Network, 2017). Available at https://www.microinsurancenetwork.org/groups/state-microin – surance-2017, accessed on 6 September 2018.

[8] Overseas Development Institute (ODI), Social protection and resilient food systems: The role of insurance, (ODI). Available at https://www.odi.org/sites/odi.org.uk/files/odi-assets/ publications-opinion-files/8614.pdf, accessed on 6 Septem – ber 2018.

[9] The R4 Rural Resilience Initiative (R4) is a strategic partner – ship between WFP and Oxfam America launched in 2011 to manage climate risks through: natural resource manage – ment, microinsurance, savings, livelihood diversification and microcredit. It reaches over 57,000 farmers in Ethiopia, Senegal, Malawi, Zambia, Kenya and Zimbabwe. For more information, see WFP website: http://www1.wfp.org/r4-ru – ral-resilience-initiative.

[10] Wanczeck, S., McCord, M., Wiedmaier-Pfister, M., Biese, K. Inclusive Insurance and the Sustainable Development Goals: How Insurance Contributes to the 2030 Agenda for Sustainable Development, (Bonn and Eschborn, Germany: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, 2017). Available at https://microinsurancenetwork. org/sites/default/files/Inclusive%20Insurance%20and%20 the%20Sustainable%20Development%20Goals%20.pdf, accessed on 6 September 2018.

[11] Hellmuth M.E., Osgood D.E., Hess U., Moorhead A. and Bho – jwani H. (eds). “Index insurance and climate risk: Prospects for development and disaster management.” Climate and Society No. 2. (New York: International Research Institute for Climate and Society (IRI), 2009). Available at https://www. preventionweb.net/publications/view/10755, accessed on 6 September 2018.

[12] Madajewicz, M. Managing risks in smallholder agriculture: The impacts of R4 on livelihoods in Tigray, Ethiopia from 2012 to 2016, (Oxfam External Evaluation Report, 2017). Available at https://www.oxfamamerica.org/static/media/files/R4_Ethi – opia_Impact_Evaluation_Report_2012-2016_2yOZSeM.pdf, accessed on 6 September 2018.

[13] Rural Resilience Initiative (R4), World Food Programme, Malawi. See https://reliefweb.int/sites/reliefweb.int/files/ resources/WFP_Malawi_R4_update.pdf, accessed on 15 April 2018.

[14] World Food Programme (WFP), African smallholder farmers get insurance payouts of US$ 1.5 million after low rainfall, (WFP News release 9 May 2018). Available at https://www. wfp.org/news/news-release/african-smallholder-farm – ers-get-insurance-payouts-us-15-million-after-low-rain – fall, accessed on 6 September 2018.

[15] Verhage F, Cramer L, Thornton P, Campbell B. Climate risk assessment and agricultural value chain prioritisation for Malawi and Zambia. CCAFS Working Paper no. 228. Wageningen, the Netherlands: CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS), 2018. Available at https://ccafs.cgiar.org/fr/node/56138#. W5JCNrhrxPY, accessed on 6 September 2018.

[16] FCS is a proxy indicator of household food security based on the weighted frequency (number of days/weeks) of intake of eight different food groups. FCS captures both elements of food security: quality (different food groups/ dietary diversity) and quantity (food frequency).

[17] The Dietary Diversity Score indicator estimates the quality of diet by measuring the number of different food groups consumed over a given period.

[18] Hellmuth M.E., Osgood D.E., Hess U., Moorhead A. and Bho – jwani H. (eds). “Index insurance and climate risk: Prospects for development and disaster management.” Climate and Society No. 2. (New York: International Research Institute for Climate and Society (IRI), 2009). Available at https://www. preventionweb.net/publications/view/10755, accessed 6 September 2018.