Bundling flood insurance and post-flood recovery to agriculture in improving smallholder livelihoods in South Asia

Urban wetlands, Colombo, Sri Lanka. Photo: Samurdhi Ranasinghe (IWMI)

Seasonal weather fluctuations directly and dramatically shape rural household welfare in developing countries. With climate projections of more severe and more frequent extreme weather events, this vulnerability will likely remain central to global poverty concerns and policy debates for the coming decades. The ongoing IWMI lead Index-based flood insurance (IBFI) products represent a promising and exciting innovation that could allow the benefits of insurance to protect the climate-related risks that vulnerable rural smallholder farmers. IBFI was successfully pilot in Bihar (India) that integrates hi-tech modeling and satellite data to predetermine flood threshold for speedy compensation to support low-income, flood-prone communities. This project will expand by bundling flood insurance and post-flood recovery to agriculture, which turns out to be complementarity that makes bundling potentially interesting among smallholder farmers. A bundled crop specific post-flood management options product can offer monotonic benefits as flood severity increases to cover low to moderate flood events i.e. depth and duration, which can substantially reduce the actuarially fair premium associated with the flood insurance. The project in partnership with seed companies will introduce flood-resistant seed varieties in the areas crop damage by floods for rapid agriculture production before moving to next crop season. The project will develop business model among public-private sector and policy briefing to government agencies for substantial investments in such innovations to improve smallholder farmers? adaptive capacity in the face of climate change, with an emphasis on improving livelihoods for women and the youth.