资源环境科技发展态势分析平台

This brief shows the many risk classes agriculture is exposed to, especially rain-fed agriculture, which, naturally, is more vulnerable to the risk of too much or too little rainfall. It shows the traditional risk-coping strategies that have largely shaped farmers’ attitudes toward risk and risk management. Finally, it discusses the global trends, challenges, and new approaches to expand the reach of agriculture insurance to reduce risks and increase the financial resilience of farmers.

Key Points

• Extreme weather events can lead to significant adverse economic impacts, particularly in the agriculture sector, that is costly to recover. In many developing countries, contingency funds, mostly financed by the state budget, have traditionally played a significant role to offer financial compensation to the affected population.
• Agricultural insurance eases post-disaster recovery by ensuring policyholders to receive compensation in the event of an occurrence of an insured peril. Commercial insurers, the public-sector, or farmers’ cooperatives, through either a formal (mutuals) or informal agreement, offer such forms of insurance.
• Insurance removes uncertainty in payment and eligibility requirements compared to compensation through contingency funds. Where the premium is financed, at least partially, by policyholders, it helps relieve pressure on the public budget. Insurance mechanisms based on risk-based pricing also incentivize risk-mitigating behavior.
• The policy framework and the regulatory environment, the risk management system in vogue, budgetary constraints, exposure, vulnerability, and the credibility of the institutional arrangements in place determine its effectiveness are critical factors for implementing successful agriculture insurance schemes.