Assessment of Innovative Approaches for Flood Risk Management and Financing in Agriculture
Floods are a major source of risk for the agricultural sector. Flood risk in the agricultural sector primarily arises from river flooding, flash floods, and coastal flooding. The impacts of floods can result in sizable agricultural damages at the l...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/381571468335941486/Assessment-of-innovative-approaches-for-flood-risk-management-and-financing-in-agriculture http://hdl.handle.net/10986/27577 |
| Summary: | Floods are a major source of risk for
the agricultural sector. Flood risk in the agricultural
sector primarily arises from river flooding, flash floods,
and coastal flooding. The impacts of floods can result in
sizable agricultural damages at the local level. Floods in
agricultural zones expose agricultural producers,
agricultural supply chains, rural financial institutions
(such as agricultural banks), and governments to financial
risks due to the loss of crops, delinquency on seasonal
production loans, damage to infrastructure and loss of
public revenues. The costs associated with these damages are
often absorbed by households directly or governments that
provide compensation to agricultural producers in the
aftermath of catastrophic flood events. Rural financial
institutions also absorb the cost of floods through loan
rescheduling or, in catastrophic cases, loan cancellation.
In many developing countries, floods are dealt with in a
reactive, rather than proactive, manner and little is done
to be financially prepared for a catastrophic outcome of
floods. Going forward, government and donors can play an
important role to facilitate the development of risk
spreading mechanisms in general and agricultural flood
insurance in particular. First, this includes investment in
the generation of public goods to support disaster risk
reduction and recovery, risk management, and ultimately
insurance applications. Second, awareness building and risk
education are essential for better risk management and
insurance. In that vein, identifying and assessing flood
risk is critical first steps. Third, many of the
technologies described here have applications beyond
insurance, including for better planning, risk reduction,
early warning, and disaster response. Insurance can
complement such activities, but is only viable if carried
out jointly as part of a broader risk management framework.
Fourth, more research and technical assistance is needed to
develop simple and financially viable products for flood
risk transfer at aggregate levels; there is increasing
demand expressed for such products from flood-prone
countries. Finally, donors and government can support
international and regional centers involved in flood
modeling and facilitate a platform that convenes the
technical expertise required for flood risk insurance
development. Several of such centers and core expertises
were identified through this work. |
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