22.11.2018

Protecting farmers – insurance against climate damage

Drought and severe weather destroy harvests. In Zambia and Peru, climate risk insurance policies offer farmers affordable cover and swift assistance.

Climate change is already making its mark around the world. Droughts, floods and other extreme weather events are becoming more frequent. The change hits countries of the South particularly hard, especially with regard to agriculture. Small-scale farmers in particular are suffering from crop failures that can threaten their economic livelihood.

On behalf of the German Government, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is devising solutions to ensure that more people are protected from damage caused by climate change – especially in poor countries. To this end, GIZ is supporting projects to develop insurance policies offering cover against climate damage and make these affordable for people in the affected countries.

In Zambia, GIZ is working on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) to give small-scale farmers access to weather-based insurance. Insurance policies of this sort already exist. They provide coverage against harvest losses, but they have not been in widespread use and for many farmers they are still too expensive. An agribusiness is thus pre-financing the insurance contributions. Farmers buy the insurance policy along with seed and fertiliser, and the contribution is deducted from their earnings at the end of the season.

In Peru, on behalf of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), GIZ is helping establish a system that effectively protects farmers from weather-induced damage. To achieve this, it is collaborating with the reinsurance company Munich Re and advising the Peruvian authorities. An affordable, state-assisted agricultural insurance scheme has been developed that is providing coverage for more than 310,000 farmers.

Read our reference text on ‘Protection and emergency assistance’ to find out more about enhancing protection against climate risks.