Can insurance help manage climate risk and food insecurity? Evidence from the pastoral regions of East Africa
This article by Michael R. Carter, Sarah A. Janzen and Quentin Stoeffler suggests that insurance can help manage climate risk and food insecurity. If well-designed, insurance contracts can be implemented and priced at a reasonable level, despite the uncertainties that attend climate change. Evidence from the Index-Based Livestock Insurance (IBLI) index insurance project in the pastoral regions in East Africa suggest that practical difficulties can be overcome and that insurance can have the impacts that underlay the positive theoretical evaluation. At the same time, continuing analysis of the IBLI experience suggests that much remains to be done if quality index insurancecontracts are to be scaled up and sustained. The authors conclude that insurance is not an easy off-the-shelf solution to the problem of climate risk and food insecurity. Creativity in the technical and institutional design of contracts is still required, as efforts to forge the more effective public-private partnerships needed to price insurance at levels that will allow insurance to fulfill its potential as part of an integrated approach to social protection and food security in an era of climate change.