Climate-related disasters & climate variability represent a major source of risks for the POOR in particular, the FARMERS who are dependent on good

Transcription

1 The Climate Change Adaptation Project on Building Climate Resilient Farming Communities in Agusan del Norte through Innovative Risk Transfer Mechanisms A demonstration Project under the United Nations MDG-F Joint Programme on Strengthening the Philippines Institutional Capacity to Adapt to Climate Change ILO-DTI-DOLE

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3 Climate-related disasters & climate variability represent a major source of risks for the POOR in particular, the FARMERS who are dependent on good weather for their survival and livelihood!

4 Farmers in Agusan del Norte... Lack access to credit info Generally obtain financing from traders at very high interest Lack acceptable collateral With limited business knowledge and experience Have unstable income & cash flow Have low paying capacity Low availment of insurance (crop, Life/Non-life) LIMITED access to mechanisms that improve and sustain productivity, transfer and manage risks, as such increase resilience!!!

5 Project Objectives 1-Develop and test financial safety nets for climate vulnerable farming populations, esp. women 2-To develop the capacities of vulnerable populations to avail of the benefits under economic diversification and a democratized governance system

6 Integrated Financial Package Financing as Usual: LGU, Coop & Rural Bank Models Prod n Loans - Low interest - Non-collateralized - Less document requirements - Simplified processing - Production-cycle responsive releasing Coop/RB: Savings Bundled with Non- Financial services - Climate Change & Environment Briefings - Financial Literacy - Agri/Enterprise Tech Support (FFS) - Market Info/Assistance Insurance - Health, Credit/Life - Crop (Traditional & Weather Index-Based)

7 Weather Index-Based Insurance (WIBI) - ILO/PCIC An insurance scheme in which claims are based on agreed weather indices and not on the actual damages suffered by the crops. Indices are developed on the basis of a good amount of historical weather data and crop yield correlated to weather. Does not require field assessments of damages; Claims are paid out once a certain index is breached. Potential to respond more quickly to farmers when there is limited amount of rainfall (drought) or excessive amount of rainfall expected to adversely affect crops. Why WIBI? Climate change is causing the weather to be unpredictable. Farmers are vulnerable as they depend on good weather for their livelihood. Enables farmers to protect their livehoods by transfer of the climate risks to insurers.

8 Weather Index-based Insurance (WIBI) Insurance as Usual: Rice and Corn Packages A package of 5 Products: Excess and Low Rainfall Indexes Affordable premiums Faster pay-outs -No field assessments of damages -No need for filing of claims pay-out automatic upon breach of index Delivered under the IFPbundled with other Financial and Non-Financial Services - WIBI literacy - Techno Training: Recommended Agri Tech & Pest Control (FFS-IPM)

9 Climate Change Adaptation Support Programme (CCASP) Innovative Financing, Insurance Solution & Marketing Assistance for Farmers & Fishers in Agusan del Norte & Caraga Region The Climate Change Adaptation Project on Building Climate Resilient Farming Communities in Agusan del Norte through Innovative Risk Transfer Mechanisms A UN-GOP and Public- Private Partnership - A follow thru undertaking aimed at sustaining and building on the gains of the CCAP and expanding the delivery of the benefits of the developed and tested innovative risk transfer mechanisms especially the IFP cum- WIBI Memorandum of Understanding (MOU) December 16, 2011

10 Agusan del Norte s Weather Index-Based Insurance (WIBI) developed under the ILO-DOLE-DTI Climate Change Adaptation Project 2009 to present Microinsurance and Natural Catastrophes: Towards a Public-Private Cooperation for Efficient Risk Management 3-4 February 2015 Manila, Philippines Brenda B. Corvera Lead Focal Person Climate Change Adaptation Support Programme (CCASP) Department of Trade and Industry- Caraga Region

11 What did CCAP deliver & CCASP start with? CCAP CCASP 2011 to present. INNOVATIVE RISK TRANSFER MECHANISMS : Integrated Financial Package (IFP) cum- Weather Index-Based Insurance (WIBI) (developed and tested during the CCAP Pilot Run) IFP for Farm Crop Production and Economic Diversification via the - Rural Bank Model Cooperative Model Local Government Unit (LGU) Loan Facility Model

12 CCAP CCASP 2011 to present. a working partnership between government and the private sector 2 Private Financial Service Providers (FSPs) : Peoples Bank of Caraga, Baug CBM Cooperative 4 Local Government Units : Buenavista, Jabonga, Las Nieves & RT Romualdez offering the IFP cum-insurance facilities and advocating the CCAP mechanisms among their constituents (2 LGUs with WIBI) CCA Financing Fund/Portfolio of about P15 M ++ (test run funds + public and private sector counterpart)

13 What did CCAP deliver & CCASP start with? CCAP CCASP 2011 to present. WIBI Package for Rice and Corn (5 products) ILO Microinsurance Innovation Facility (GVA) funded the experts who developed the computer programme/burn analysis ILO -Philippine Crop Insurance Corporation CCAP WIBI Team working to study & review the Indexes through the 7 cycles] PCIC with -product delivery WIBI accessed through the following mediators: Rural Bank, Coop, LGUs (in Buenavista & RTRomualdez)

14 CCAP CCASP 2011 to present. more climate change- aware farming households and their communities, better able to cope and adapt to climate change risks Core group of farmer-borrowers/ beneficiaries who have availed of the financial and non-financial services under the IFP and WIBI : 1, farmers/farming households in nearby communities who have come to know of the CCAP products and services

15 What did CCAP deliver & CCASP start with? CCAP CCASP 2011 to present. Early Warning Systems (EWS) plans prepared & operational with devices installed in 4 CCAP Priority Areas (thru partnership with DOST-Caraga, DOST-PAG-ASA & OCD) 4 Automatic Weather Stations 16 Manual Rain Gauges 11 Flood Water Level Gauges 10 Flood Warning Signages + 1 additional DOST-PAG-ASA AWS in Las Nieves

16 CCAP CCASP 2011 to present. Four LGUs with Organic Fertilizer Production Facility funded by the DOLE-Caraga + 1 more organic fertilizer facility (still funded by DOLE) operated by Baug CARP Beneficiaries Multipurpose Coop in Magallanes, Agusan del Norte

17 What did CCAP deliver & CCASP start with? CCAP CCASP 2011 to present. LGUs, government agencies, non-government /peoples organizations esp. farmers associations and their focal persons capacitated on Relevant assessments inc. Vulnerability & Adaptation Assessments, Value Chain Mapping & Analysis Financial & WIBI Literacy EWS planning, implementation & monitoring Climate risk-based decision [risk taking & transfer] making on and off farm

18 Quarterly CCASP Consultative and Assessment Meetings Since 2012 to present Post- CCAP as of 7 th cycle Performance Measures & Results Crop Production Alternative Livelihood Total Loans Released P 70 M P 28 M P 98 M Loan Availments 3,500 2,700 6,200

19 Weather Index-Based Insurance CCAP/CCASP Experience

20 WIBI Production and Payout Summary (Cycles 1-5) A. By Lender/Aggregator - Cycles 1-5 PRODUCTION PAYOUTS Lender/Mediator/ No of Area Amount of GrossNo of Payout Payout Payout Aggregator Farmers (Has.) Cover Premium Fs Payout Rate (%) Ratio Incidence Cause 1. Baug MPC * , , , LR 2. LGU Buenavista* ,756, , , LR 3. LGU R. T. R. ** ,202, , ,482, ER 4. People's Bank of C** , , , ER TOTAL 851 1, ,852, , ,947, NOTE: * Low Rainfall and Excess Rainfall Covers. ** Excess Rainfall Cover only

21 WIBI Production and Payout Summary (Cycles 1-5) B. By Crop Season a. Wet Season (May-October) - Cycles 1, 3 & 5 PRODUCTION PAYOUTS Lender/Mediator/ No of Area Amount of Gross No of Payout Payout Payout Aggregator Farmers (Has.) Cover Premium Fs Payout Rate (%) Ratio Incidence Cause 1. Baug MPC * , , , LR 2. LGU Buenavista* ,893, , , LR 3. LGU R. T. R. ** ,832, , ,096, ER 4. People's Bank of C** , , TOTAL ,184, , ,537, NOTE: * Low Rainfall and Excess Rainfall Covers. ** Excess Rainfall Cover only

22 WIBI Production and Payout Summary (Cycles 1-5) b. Dry Season (November - April) - Cycles 2 & 4 PAYOUTS PRODUCTION Lender/Mediator/ No of Area Amount of Gross No of Payout Payout Payout Inciden Aggregator Farmers (Has.) Cover Premium Fs Payout Rate (%) Ratio ce Cause 1. Baug MPC * , , LGU Buenavista* ,863, , LGU R. T. R. ** ,370, , , ER 4. People's Bank of C** , , , ER TOTAL ,622, , , NOTE: * Low Rainfall and Excess Rainfall Covers. ** Excess Rainfall Cover only

23 WIBI Production and Payout Summary (Cycles 1-5) B. By Cause of Breach of Index Trigger a. Low Rainfall PRODUCTION PAYOUTS Lender/Mediator/ No of Area Amount of Gross No of Payout Payout Payout Aggregator Farmers (Has.) Cover Premium Fs Payout Rate (%) Ratio Incidenc e Cause 1. Baug MPC * , , , LR 2. LGU Buenavista* ,756, , , LR TOTAL ,410, , , b. Excess Rainfall PRODUCTION PAYOUTS Lender/Mediator/ No of Area Amount of Gross No of Payout Payout Payout Aggregator Farmers (Has.) Cover Premium Fs Payout Rate (%) Ratio Incidenc e Cause 3. LGU R. T. R. ** ,202, , ,482, ER 4. People's Bank of C** , , , ER TOTAL ,397, , ,506,

24 Weather Index-Based Insurance CCAP/CCASP Experience

25 Developing the WIBI : Considerations and Challenges 1. Conduct of research and undertake modelling 2. Conduct of WIBI Literacy 3. Secure reference weather stations an setup Climate Information System 4. Establish procedures, rules and regulations on marketing, and underwriting; Monitoring and Cycle Management; as well as Processing of Pay-outs 5. Conduct of test runs and review/enhancement of indices 6. Implementation/Marketing Setting up agreements with mediators and conduits Processing of applications and enrolment Management and monitoring of the cycle Managing the CIS and processing of pay-outs Post cycle harvest assessment

26 Lessons Learnt- 1. Research and modelling takes time and money 2. WIBI literacy needs to be conducted in several brief modules, through adult learning techniques/games and in local language; and should be continuing 3. The literacy module also has to include advocacy for adoption of good farm management

27 Lessons Learnt- 4. The system for monitoring the breach of index should be developed early and one which all parties including farmers are able to monitor. 5. Maintaining accuracy of instruments and securing measurements 6. The index are deemed most effective in areas not more than 20 kilometres from the weather measurement instrument (to minimize variation between the weather experienced at the farm level and at the instrument level)

28 Lessons Learnt - 7. Given the novelty and limited exposure of the WIBI proram in the two test municipalities famers need more intensive WIBI literacy briefings 8. Certain farmers especially those with prior experience with the traditional crop insurance still prefer the traditional insurance over the WIBI - because a. non-inclusion of pests an diseases among the insurable risks under WIBI b. dissatisfaction with the pay-outs/no pay-out even if farm is flooded (need to study inclusion of flood peril) c. cases of delayed payments (certification process) d. doubts on pay-outs (breached index without damage)

29 WIBI in the Overall Risk Management and Integrated Financial Package Scheme

30 Lessons Learnt- Development: Understanding target groups characteristic and needs for financial and nonfinancial services through relevant analysis inc. Vulnerability & Adaptation Assessments, Farming Value Chain Analysis & Market Research are critical in the design of diversified, affordable and sustainable packages Package Components/Features: Bundling financial services with non-financial services makes the package more attractive to the poor while increasing their opportunities to maximize outputs and diversify their productive activities. Group solidarity as collateral substitute allows availment and access by asset-poor communities Emphasis on savings products (voluntary or compulsory) help farmers to better deal with emergencies including disasters and to be less loan dependent for their economic activities

31 Lessons Learnt- Integrating insurance and other social protection mechanisms- to include crop, health & medical insurance, strengthen confidence of farmers to engage in agriculture risk taking while protecting their crops and their families. Integrating risk reduction measures to financial packages work to reduce exposure for more effective resilience-building work. Engaging in Public and Private Partnership with LGUs, training institutes, financial service providers inc. insurers) facilitate the effective, greater reach for financial and/or non-financial services and sustainability of delivery.

32 Special Recommendations for LGUs - Localize and enforce the provisions of the National Organic Agriculture Act to promote greener and more productive agriculture for climate change adaptation. Ensure the deployment of at least one Agriculture Technician per Barangay with corresponding capability building and budgetary support to ensure effective delivery of agro-technology services to farmers. Ensure the establishment of Enterprise Offices which support development of rural enterprises (agri and nonagri-based)

33 Thank You