Objective

Mainstreaming climate risk insurance and developing climate risk transfer tools for rural areas of India.

Context

Climate change brings a serious threat to more than 7 billion human beings and remains a challenge for policymakers across the world, including India. The non-linear and unforeseen climate risks have been manifesting in greater intensity and severity in the form of extreme weather events like floods, cyclones, etc. Insurance, as a market-based financial instrument, has emerged as a viable risk transfer mechanism and a key component of adaptation measures as outlined in Article 8 of the 2015 UN Paris Agreement.

The Government of India (GoI) has implemented various measures to reduce the risk to farmers and to improve their resilience against external, uncontrollable risks. Despite the preventive measures in place, insurance is considered among the most efficient and transparent mechanisms to compensate farmers for various exogenous, high-impact losses for their operations.

All the salient crop insurance schemes in India have focused on a standardised (one-size-fits-all) design of crop insurance products and operational processes without considering the farm and crop diversity. While standardisation in the design of insurance products and operational processes is essential for an overall programme of such a large scale, variability (in crops and farm contexts) can severely compromise the efficiency of crop insurance products.

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Approach including the target group

The overall objectives of this project are to support:

• Indian stakeholders in managing and mitigating climate risks for vulnerable groups and sectors.
• in capacity building of actors at different levels.
• in planning, implementing, and financing CRI initiatives at the State level.

Further, the project supports stakeholders at the national and subnational levels in policy formulation, preparation, and implementation of tools and instruments which address the challenges of climate change.

Interest in Climate Risk Insurance (CRI) as a risk transfer instrument has grown considerably within the Indian government and among state authorities. However, the existing national approaches, some of which are highly subsidised, and various pilot projects are yet to demonstrate their replication and scaling potential. To be politically anchored, the CRI approaches require successfully tested models as a basis for broader planning, implementation, scaling, and financing. With this purpose, the Indian Ministry of Environment will be advised to develop and implement national and state approaches to climate risk insurance in selected key sectors by way of example.

Highlight Activities

• Development of a digital platform for interaction and information on climate risks and climate risk insurance in the form of a web portal and an app for the local authorities and all farmers based in the rural areas of India.
• Implementation of new CRI solutions in 2 federal states-
  • Generation of real-time crop statistics on acreage and yield at the village level, monitoring agriculture disasters.
  • Monitoring drought, floods, and cyclones for advocating mitigation strategies and loss assessment using satellite and drone imagery.
  • Digital soil mapping and creation of knowledge/spatial database, water resource information system, and automated irrigation.
  • Pilot study for developing smart sampling for crop cutting experiments (CCE) optimisation, mobile-based crop insurance at the farm level.
  • Profiling vulnerability to climate risk, soil orders of Tamil Nadu, and assessing the impact of climate change.
  • Study nutritious crops for Community Nutrition Gardens (CNGs) for nutritive value, map uncultivated crops of high nutritive value for Securing Nutrition, Enhancing Resilience (SENU) project.
  • Demonstration of Climate-Smart / Resilient innovation initiatives for managing climate risk.
  • Develop Information, Education, and Communication (IEC) tools.
• Engaging with stakeholders at the national level viz. ministries and line departments responsible for climate action and policy, agriculture, and disaster management to mainstream climate change risk adaptation and climate risk insurance into comprehensive risk management.
• Supporting state departments and authorities at sub-national level to provide climate risk insurance for climate change perils faced by the state and its people.