Impact insurance crucial in climate change mitigation


Impact insurance crucial in climate change mitigation

Climate change is affecting every farmer across the world.
Climate change is affecting every farmer across the world. FILE PHOTO | NMG 

Agriculture is unique. It supplies food, stores carbon and generates renewable energy. Farming is now on the front-line of feeling impacts of climate change.

Climate change is affecting every farmer across the world. According to the GAIN-Index 2019, Kenya is the 32nd most vulnerable and the 40th least ready country to respond to climate changes. At the same time, the global demand for food is increasing and, according to UN forecasts, the number of mouths to feed will rise to nearly 10 billion by 2050.

The agriculture sector — including crop and livestock — is one of the most important sectors of the economy and is the main source of livelihoods for the majority of Kenyans in terms of growth, employment creation and also foreign exchange earnings and food security.

However, the sector regularly experiences the impact of climate change, including flooding and droughts and changing rainfall patterns.

Agriculture in Kenya has significant potential to address the challenge of producing for the future as well as tackling climate change.


Kenya has become one of Africa’s pioneers in developing an agriculture insurance market to protect smallholders and pastoralists against the risks of the unpredictable and changing climate.

Kenya’s first index-based agriculture insurance pilot took place in 2006. Since then, the Kenyan government, the private sector and development institutions, have been collaborating and experimenting to develop and expand the market.

With their innovative approach, they have developed a strategic focus on micro insurance, agriculture and livestock insurance and created various products to protect vulnerable communities against climate related risks.

Index-based Livestock Insurance is an innovative approach, and Area Yield Index Insurance (AYII) has evolved from purely a weather index to a multi-peril cover that guarantees a minimum yield. The insurance cover provides compensation where payments are linked to easily measurable environmental conditions, an index (for example, precipitation level, yields or vegetation levels measured by satellite).

These are closely linked to losses from the lack of forage for the animal or reduction in the agricultural production. When the index exceeds a certain threshold, farmers and pastoralists automatically receive compensation.

Kenya Agricultural Insurance Programme (KAIP) provides crop area AYII across 33 counties. Kenya agriculture sector is highly dependent on rains and with the effect of climate change, droughts are occurring more frequently.

Through these two programmes, insurers introduced insurance as a risk mitigation, which had been non-existent among the target communities, providing a fallback position when the vagaries of weather and other risk events strike. These programmes offers reprieve when either droughts or floods destroy crops.

Climate change is an existential threat for communities. How we combat it and adapt will shape our future and innovative solutions from impact insurance is one way to tackle the effects of climate change.

This is the positive narrative that we must get out there.

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