Scaling up index insurance for smallholder farmers: Recent evidence and insights

This report explores evidence and insights from five case studies that have made significant recent progress in addressing the challenge of insuring poor smallholder farmers and pastoralists in the developing world. In India, national index insurance programmes have reached over 30 million farmers through a mandatory link with agricultural credit and strong government support. In East Africa (Kenya, Rwanda and Tanzania), the Agriculture and Climate Risk Enterprise (ACRE) has recently scaled to reach nearly 200,000 farmers, bundling index insurance with agricultural credit and farm inputs. ACRE has built on strong partnerships with regional initiatives such as M-PESA mobile banking. In Ethiopia and Senegal, the R4 Rural Resilience Initiative has scaled unsubsidized index insurance to over 20,000 poor smallholder farmers who were previously considered uninsurable, using insurance as an integral part of a comprehensive risk management portfolio. With strong public and private sector support, the Mongolia Index-Based Livestock Insurance Project (IBLIP) insures more than 15,000 nomadic herders and links commercial insurance with a government disaster safety net. Finally, the Index-Based Livestock Insurance (IBLI) project in Kenya and Ethiopia demonstrates innovative approaches to insuring poor nomadic pastoralists in challenging circumstances. A few common features appear to have contributed to recent progress within these case studies: explicitly targeting obstacles to improving farmer income; integration of insurance with other development interventions; giving farmers a voice in the design of products; investing in local capacity; and investing in science-based index development. Evidence from these case studies can inform the ongoing debate about the viability of scaling up index-based insurance for vulnerable smallholder farmers in the developing world. The rapid progress observed in recent years suggests that index insurance has the potential to benefit smallholder farmers at a meaningful scale, and suggests the need to reassess arguments that lack of demand and practical implementation challenges prevent index-based insurance from being a useful tool to reduce rural poverty

Index insurance and climate risk management: addressing social equity

Motivation Fair distribution of benefits from index insurance matters. Lack of attention to social equity can reinforce inequalities and undermine the potential index insurance holds as a tool for climate risk management that is also pro-poor. Purpose The aims are to: (i) examine social equity concerns raised by index insurance in the context of climate risk management; (ii) consider how greater attention can be given to social equity in index insurance initiatives; and (iii) reflect on the policy challenges raised by seeking to take social equity into account as a mechanism for climate risk reduction. Approach and methods The article draws on learning from the CGIAR’s Research Program on Climate Change, Agriculture and Food Security (CCAFS) and presents the cases of the Index Based Livelihoods Insurance (IBLI) and Agriculture and Climate Risk Enterprise Ltd. (ACRE) in East Africa. It proposes a framework for unpacking social equity related to equitable access, procedures, representation and distribution within index insurance schemes Findings Systematically addressing social equity raises hard policy choices for index insurance initiatives without straightforward solutions. Attention to how benefits and burdens of index insurance are distributed raises the unpalateable truth for development policy that the poorest members of rural society can be excluded. Nevertheless, a focus on social equity may open up opportunities to ensure index insurance is linked to more socially just climate risk management. At the very least, it may prevent index insurance from generating greater inequality. Taking social equity into account thus, shifts the focus from agricultural systems in transition per se to systems with potential to incorporate societal transformation through distributive justice. Policy implications A framework is presented for unpacking different dimensions of social equity in index insurance schemes. It is intended to facilitate identification of opportunities for building outcomes that are more equitable, with greater potential for inclusion and fairer distribution

On Predicting Mössbauer Parameters of Iron-Containing Molecules with Density-Functional Theory

The performance of six frequently used density functional theory (DFT) methods (RPBE, OLYP, TPSS, B3LYP, B3LYP*, and TPSSh) in the prediction of Mössbauer isomer shifts(δ) and quadrupole splittings (ΔEQ) is studied for an extended and diverse set of Fe complexes. In addition to the influence of the applied density functional and the type of the basis set, the effect of the environment of the molecule, approximated with the conducting-like screening solvation model (COSMO) on the computed Mössbauer parameters, is also investigated. For the isomer shifts the COSMO-B3LYP method is found to provide accurate δ values for all 66 investigated complexes, with a mean absolute error (MAE) of 0.05 mm s–1 and a maximum deviation of 0.12 mm s–1. Obtaining accurate ΔEQ values presents a bigger challenge; however, with the selection of an appropriate DFT method, a reasonable agreement can be achieved between experiment and theory. Identifying the various chemical classes of compounds that need different treatment allowed us to construct a recipe for ΔEQ calculations; the application of this approach yields a MAE of 0.12 mm s–1 (7% error) and a maximum deviation of 0.55 mm s–1 (17% error). This accuracy should be sufficient for most chemical problems that concern Fe complexes. Furthermore, the reliability of the DFT approach is verified by extending the investigation to chemically relevant case studies which include geometric isomerism, phase transitions induced by variations of the electronic structure (e.g., spin crossover and inversion of the orbital ground state), and the description of electronically degenerate triplet and quintet states. Finally, the immense and often unexploited potential of utilizing the sign of the ΔEQ in characterizing distortions or in identifying the appropriate electronic state at the assignment of the spectral lines is also shown

The Information Value of the Stress Test and Bank Opacity

We investigate whether the 'stress test,' the extraordinary examination of the nineteen largest U.S. bank holding companies conducted by federal bank supervisors in 2009, produced information demanded by the market. Using standard event study techniques, we find that the market had largely deciphered on its own which banks would have capital gaps before the stress test results were revealed, but that the market was informed by the size of the gap; given our proxy for the expected gap, banks with larger capital gaps experienced more negative abnormal returns. Our findings suggest that the stress test helped quell the financial panic by producing vital information about banks. Our findings also contribute to the academic literature on bank opacity and the value of government monitoring of banks