The Weather Risk Management Facility (WRMF) is a joint IFAD and World Food Programme (WFP) initiative to support the sustainable development of weather risk management instruments in developing countries.
Extreme weather events and natural disasters such as drought or floods can have a devastating impact on food security as well as the social and economic development of rural households. This is further exacerbated by the threat and impact of climate change.
Launched in 2008 with the support of the Bill and Melinda Gates Foundation, this collaboration builds on IFAD’s experience in rural finance and WFP’s focus on climate change and disaster risk reduction. Working together, the WRMF helps to bridge the gap between emergency relief and rural development.
One area the WRMF has worked in is weather index-based insurance, an insurance product correlated to weather patterns for local crops, such as rainfall levels. One advantage of this kind of insurance is that payouts for a whole village can be triggered at one time, eliminating the need for the individual field loss assessments required for traditional weather insurance.
WRMF conducted research to examine if index insurance can be applied sustainably and at a large scale in order to help the poorest of the poor, Learning from the pilot experiences of IFAD and WFP in China and Ethiopia and other pilot projects in index insurance worldwide, the result of this study is the publication "The Potential for scale and sustainability in weather index insurance for agriculture and rural livelihoods".
This IFAD-WFP paper looks at the challenges and opportunities in designing and implementing index insurance products for poor rural smallholders, identifying eight key principles for weather index-based insurance to reach scale and sustainability. It also includes nine case studies on index insurance programmes and outlines how donors and governments can support the sector.