Agriculture Sector Disaster Risk Reduction and Management Financing - Global and Regional Perspectives

1. Session 4: The wider picture of risk transfer and
development
Agriculture sector Disaster Risk Reduction and Management Financing
– global and regional perspectives
1
Olga Buto
Disaster Risk Reduction Specialist
Climate and Environment Division
FAO

2. 2
Content
▪ Damage and loss from natural disasters in
agriculture
▪ Trends in investment for Disaster Risk
Reduction and Management in agriculture
▪ Risk transfer mechanisms in agriculture

3. 3
Damages and losses from natural disasters in agriculture
16%
Disaster
damage in
agriculture
23% Disaster
damage
and loss in
agriculture
Source: FAO, 2018
30%
83%
11%
17%
4%
23%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
VOLCANIC ERUPTION
DROUGHT
TSUNAMI
FLOOD
EARTHQUAKE
STORM
DAMAGE AND LOSS IN AGRICULTURE AS SHARE OF TOTAL DAMAGE AND LOSS ACROSS ALL
SECTORS (2006–2016), BY TYPE OF HAZARD
31% Disaster
loss in
agriculture

4. 4
8%
4%
3%
36%
49%
0% 20% 40% 60%
UNSPECIFIED
FORESTRY
FISHERIES
LIVESTOCK
CROP
DAMAGE AND LOSS IN AGRICULTURE BY
AGRICULTURAL SECTOR, PERCENTAGE SHARE
OF TOTAL (2006–2016)
Source: FAO, 2018
86%
4%
9%
1%
DAMAGE AND LOSS TO
LIVESTOCK SECTOR BY TYPE OF
HAZARD (2006–2016)
Drought
Storm
Flood
Earthquake
Damages and losses from natural disasters in agriculture

5. 5
Agriculture sector susceptibility to natural disasters in ECIS region
3%
3%
4%
5%
7%
21%
22%
35%
Landslide
Drought
Other
Wildfire
Earthquake
Storm
Extreme…
Flood
0% 10% 20% 30% 40%
ECIS REGION DISASTER FREQUENCY IN
2000-2016
Ten top countries by four
global indexes considering
disasters and climate change
1.Tajikistan
2.Serbia
3.Russia
4.Bosnia and Herzegovina
5.Romania
6.Uzbekistan
7.Kyrgyzstan
8.Albania
9.Turkey
10.Turkmenistan
Group of countries by
actual agriculture sector
susceptibility indicator
1.Uzbekistan
2.Armenia
3.Moldova
4.Cyprus
5.Tajikistan
6.Kyrgyzstan
7.Albania
8.Mongolia

6. 6
Investment in Disaster Risk Reduction and Management in agriculture
The international efforts in assessing development aid allocation to DRR
found out the following:
▪ Small proportion of humanitarian aid goes into disaster prevention and
preparedness across sectors (OECD, 2017)
▪ Focus on DRR across sectors not specifying sub-division (GFDRR, 2015)
▪ DRR is a small fraction of development assistance (in 1991-2010 - with 66% to
emergency response) (ODI, 2015)
▪ Between 2002-2014 about 13% of total adaptation finance targeted DRR (ODI,
2015)
Apart from that - Foreign Direct Investment in agriculture sectors was relatively low –
in period 1980-2006 has never exceeded 8 percent (FAO, 2012)

7. 7
Investment in Disaster Risk Reduction and Management in agriculture
“Europe” region based on OECD data
5%
95%
Total ODA to
Humanitarian
Aid
Total ODA to
all sectors
15%
85%
Total ODA to
Humanitarian
Aid in
agriculture
Total ODA to
Humanitarian
Aid
84%
2%
14%
TOTAL ODATO “HUMANITARIAN AID” IN
AGRICULTURE
Total ODA to Emergency
Response in agriculture
Total ODA to Prevention and
Preparedness in agriculture
Total ODA to
Reconstruction, Relief and
Rehabilitation in agriculture
Preliminary FAO’s assessment results based on OECD data analysis

8. 8
$0
$50
$100
$150
$200
$250
$300
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total ODA to “HumanitarianAid” sector in agriculture in Europe in 2004-
2016 ($US million)
ODA to Emergency
Response in
agriculture sectors
ODA to Prevention
and Preparedness
in Agriculture incl.
Flood Prevention
and Control in
Agriculture
ODA to
Reconstruction,
Relief and
Rehabilitation in
Agriculture sectors
$1.830
$7.633
$0.316
$0.316
$0.000
$0.000
$10.089
$0.000
$0.052
$0.257
$0.391
$1.528
$0.086
$0 $2 $4 $6 $8 $10 $12
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Total ODA to Prevention and Preparedness in
Agriculture incl. Flood Prevention and Control in
Agriculture ($US million)
Investment in Disaster Risk Reduction and Management in agriculture
“Europe” region based on OECD data
Preliminary FAO’s assessment results based on OECD data analysis

9. 9
83%
17% Total ODA to
Emergency
Response
Total ODA to
Emergency
Response in
agriculture
97
%
3%
Total ODA to
Prevention and
Preparedness incl.
Flood Prevention and
Control
Total ODA to
Prevention and
Preparedness in
Agriculture incl. Flood
Prevention and Control
in agriculture
17%
83%
Total ODA to
Reconstruction,
Relief and
Rehabilitation
Total ODA to
Reconstruction,
Relief and
Rehabilitation in
agriculture
Investment in Disaster Risk Reduction and Management in agriculture
“Europe” region based on OECD data
Preliminary FAO’s assessment results based on OECD data analysis

10. 10
Risk transfer mechanisms in agriculture
▪ FAO encourage a comprehensive approach to risk management
▪ Mainstreaming financial instruments into agricultural sectors for
addressing risks can be useful, but should be in accordance with the
policies of each country
▪ Social protection, climate risk insurance and climate forecast-based
financing, can help to shift the financial consequences of particular
risks
▪ A number of case studies and pilot initiatives demonstrated potential
and barriers of financial instruments for risk management in the
agricultural sectors particularly in developing countries

11. 11
Risk transfer mechanisms in agriculture
Ethiopia Project on Interlinking Insurance
with Credit for Agriculture (EPIICA)
 Risk-driven reluctance to invest in inputs such as
fertilizer and improved seeds may be one of the
major reasons for low crop yields in several
countries in Africa
 The obvious policy intervention to protect
farmers against such risks would appear to be
insurance indexed to local weather conditions
 The results of the project in Ethiopia indicated
that weather index insurance has a palliative
rather than transformative effect, and protects
farmers who already have relatively high rates of
fertilizer use against risk
Aquaculture insurance project inVietnam
 To be successful the technical knowledge on
aquaculture insurance of all stakeholders (i.e.
farmers, players in insurance business and
government officers) should be enhanced.
 Coordination among agencies and units in the
process of implementation is necessary to
synchronize the work of advocacy, damage
assessment and claim settlement
 Effective risk management requires a
coordinated multi-stakeholder approach.
 Insurance subject should be incorporated in the
high education system and research
programmes, specifically those for developing
innovative schemes suitable for small scale
aquaculture
Crop insurance feasibility study in
Malawi
 Index based risk transfer instruments
should be considered as one of the
component of a more comprehensive
risk management strategy and should be
designed in order to address specific
weather risks
 Weather insurance program is still at its
very first stage both in terms of crops
involved, area covered and modalities on
how to link to insurance.
 The construction of rainfall index to
address or better prevent food crisis
needs improvement to become
operational
There are continuous efforts taking place to address the specific
barriers ranging from weather monitoring, observations and
agriculturally relevant stress indices
Source: FAO, submission to UNFCCC

12. 12
▪ In-adequate weather
monitoring
▪ Weather stations have
traditionally been the
primary data source for
weather index insurance
programs
▪ In many developing
countries the number of
weather stations is very
limited
▪ Spatial interpolation
techniques that can be
used in some situations to
solve the problem of low
density of stations
Agricultural Stress Index System (ASIS)
▪ However, these indices would need to be
carefully calibrated locally
▪ Remote sensing index can work better in
countries with semi-arid conditions
▪ With respect to weather station-based indices,
a remote sensing-based index presents
the advantage of exhaustive ground
coverage
▪ On the other hand, rainfall estimates derived
from remote sensing present the disadvantage
of over/underestimating rainfall; in this case,
vegetation indices may be useful as proxy for
assessing the crop condition
Drought early warning in Kyrgyzstan
in 2014, using Agricultural Stress
Index
▪ Analysis based on satellite imagery
together with field reports indicated
that vast areas in the northwest
received below-average rainfall from
February through July
▪ Coincides with crucial periods of crop
establishment (spring wheat) and
growth stages (winter crop)
▪ GIEWS analysis based on the
Agricultural Stress Index (ASI),
indicated that wheat yields in 2014
would be close to the low yields
obtained in 2008 and 2012 when
Kyrgyzstan was affected by serious
droughts
Risk transfer mechanisms in agriculture
Source: FAO, submission to UNFCCC and GIEWS report

13. 13
Source: FAO, 2018
Access to predictable, sizable and
regular social protection benefits
can, in the short-term buffer exposure of
poor households from the impacts of
climate risks:
▪ Social protection can protect the
poor from shocks, including erosion
of productive assets and minimizing
negative coping practices
▪ Function of social protection
should be to install 'safety nets' -
for example, by providing cash or food
transfers or public works employment
during periods of crisis, as an
alternative to having poor households
sell their productive assets to buy
food.
Risk transfer mechanisms in agriculture
Safety nets
In 2017, FAO provided a
package in Somalia consisting of cash
transfers, quality local seeds, land
preparation and irrigation support,
training and safe storage equipment.
This helped families buy food and
meet immediate needs while growing
food over the medium- to longer-
term.
Forecast-based financing
▪ During the 2015–2016 El Niño,WFP’s
Food Security Climate Resilience Facility
used seasonal climate forecasts to trigger
contingency funding for community-
level resilience activities before the
anticipated shock (drought)
occurred, thereby helping preserve food
security.

14. 14
Conclusion
▪ Agriculture sector is highly affected by frequency and
intensity of natural hazards and disasters
▪ Investment in Disaster Risk Reduction and
Management measures in agriculture is low
▪ Risk transfer mechanisms are needed, as can be part
of the solution to achieve sustainable development of
rural livelihoods

15. 15
THANK YOU