Satellite data for weather index insurance: scaling out (SatWIN-Scale)
Lead Research Organisation:
University of Reading
Department Name: Meteorology
Abstract
Farmers in Africa are vulnerable to climate-related risk. This is exacerbated by a lack of access to traditional insurance. An alternative method of mitigating risk is weather index insurance (WII). Rather than insuring a proven agricultural loss, WII pays out in the event of a weather index being breached. Although, in principle, WII could be provided to millions of farmers in Africa, until recently, most schemes have covered only the few who live near a rain gauge.
Remotely sensed weather data, such as the TAMSAT satellite-based rainfall estimates, provide a means of extending WII to farmers who do not live near a rain gauge. Through a PURE associates project (SatWIN), insurance agency MicroEnsure partnered with the TAMSAT group at the University of Reading to extend WII to ~44,500 farmers in Africa, during the last rainy seasons.
The success of the pilot schemes has opened opportunities to implement WII at a national level, starting with 200,000 farmers in Zambia next year. Expanding (scaling out) the provision of WII to this extent however, involves significant disruption to standard business practices, both for the financial and agricultural sectors. For an expansion to be undertaken in a responsible and commercially sustainable manner, moreover, several scientific and technological issues must be addressed. It is thus critical that TAMSAT and MicroEnsure continue to engage closely, building on the success of SatWIN. Notwithstanding this, it should be noted that this project targets the wider African financial and agricultural sectors, and the outcomes are thus relevant beyond MicroEnsure.
The proposed project will develop a new methodology and associated set of tools for pricing WII policies that takes into account the diversification of risk associated with scaling out. Beyond commercial benefit, national-scale WII could potentially enhance disaster response, with weather indices acting as a trigger for provision of aid. The implementation of WII for this purpose requires accurate information about the links between weather indices and agricultural risk at regional scale. The findings of the proposed project will thus provide valuable information to policy makers tasked with responding to humanitarian disaster. The regional scale links between insured weather indices and losses are also of interest to the financial industry, who need robust information on the weather-related risk that their customers face, to judge their credit-worthiness and design bundled WII/loan products.
Within the TAMSAT/MicroEnsure partnership, the proposed work will combine fundamental environmental science with satellite applications - ultimately, for the benefit of some of the poorest people in the world.
[Cut and paste from section 4 of the application form]
Remotely sensed weather data, such as the TAMSAT satellite-based rainfall estimates, provide a means of extending WII to farmers who do not live near a rain gauge. Through a PURE associates project (SatWIN), insurance agency MicroEnsure partnered with the TAMSAT group at the University of Reading to extend WII to ~44,500 farmers in Africa, during the last rainy seasons.
The success of the pilot schemes has opened opportunities to implement WII at a national level, starting with 200,000 farmers in Zambia next year. Expanding (scaling out) the provision of WII to this extent however, involves significant disruption to standard business practices, both for the financial and agricultural sectors. For an expansion to be undertaken in a responsible and commercially sustainable manner, moreover, several scientific and technological issues must be addressed. It is thus critical that TAMSAT and MicroEnsure continue to engage closely, building on the success of SatWIN. Notwithstanding this, it should be noted that this project targets the wider African financial and agricultural sectors, and the outcomes are thus relevant beyond MicroEnsure.
The proposed project will develop a new methodology and associated set of tools for pricing WII policies that takes into account the diversification of risk associated with scaling out. Beyond commercial benefit, national-scale WII could potentially enhance disaster response, with weather indices acting as a trigger for provision of aid. The implementation of WII for this purpose requires accurate information about the links between weather indices and agricultural risk at regional scale. The findings of the proposed project will thus provide valuable information to policy makers tasked with responding to humanitarian disaster. The regional scale links between insured weather indices and losses are also of interest to the financial industry, who need robust information on the weather-related risk that their customers face, to judge their credit-worthiness and design bundled WII/loan products.
Within the TAMSAT/MicroEnsure partnership, the proposed work will combine fundamental environmental science with satellite applications - ultimately, for the benefit of some of the poorest people in the world.
[Cut and paste from section 4 of the application form]
Organisations
- University of Reading (Lead Research Organisation)
- ONE ACRE FUND (Collaboration)
- World Food Programme (Italy, Sudan, Senegal) (Collaboration)
- International Committee of the Red Cross (Collaboration)
- INFORM GmbH (Collaboration)
- African Risk Capacity (Collaboration)
- Pula Advisors (Collaboration)
- MicroEnsure (Project Partner)
Publications
Asfaw D
(2018)
TAMSAT-ALERT v1: a new framework for agricultural decision support
in Geoscientific Model Development
Black E
(2023)
Application of TAMSAT-ALERT soil moisture forecasts for planting date decision support in Africa
in Frontiers in Climate
Black E
(2016)
The Use of Remotely Sensed Rainfall for Managing Drought Risk: A Case Study of Weather Index Insurance in Zambia
in Remote Sensing
Black E
(2015)
Exploiting Satellite-Based Rainfall for Weather Index Insurance: The Challenges of Spatial and Temporal Aggregation
in 1st International Electronic Conference on Remote Sensing
Braghiere R
(2019)
Underestimation of Global Photosynthesis in Earth System Models Due to Representation of Vegetation Structure
in Global Biogeochemical Cycles
Dunning C
(2017)
Identification of deficiencies in seasonal rainfall simulated by CMIP5 climate models
in Environmental Research Letters
Dunning C
(2018)
Later Wet Seasons with More Intense Rainfall over Africa under Future Climate Change
in Journal of Climate
MacDonald A
(2019)
Groundwater and resilience to drought in the Ethiopian highlands
in Environmental Research Letters
Description | We have shown that: - remotely sensed rainfall can be used to provide weather insurance to a large number of farmers, provided spatial and temporal scale are carefully integrated into the design of the weather indices - diversification of risk portfolios is possible for international organizations, if teleconnections are taken into account |
Exploitation Route | TAMSAT data will continue to be used for weather index insurance by several insurers and other organizations in Africa. |
Sectors | Agriculture Food and Drink Environment Financial Services and Management Consultancy |
Description | This award has led to over 60,000 farmers gaining access to drought insurance in Zambia. It is likely that these farmers will receive pay outs to help them weather the El Nino. We have produced a Practioners Guide to using remotely sensed data for drought insurance that has received feedback and contributions from key players in the insurance and reinsurance industry. This is already leading to improved practice (eg on the selection of spatial scale for insurance in the R4 project in Senegal). Updated to add that the insurance scale out has continued, with over 1M households (~5M people) now insured using TAMSAT data |
Sector | Agriculture, Food and Drink,Environment,Financial Services, and Management Consultancy |
Impact Types | Societal Economic |
Description | Changed practices for provision of index insurance |
Geographic Reach | Africa |
Policy Influence Type | Influenced training of practitioners or researchers |
Impact | Several million farmers, who could not previously be insured, are now insured using satellite-based precipitation estimates. This has improved resilience to drought at a national scale. |
Description | A new drought model for Pakistan |
Amount | £37,500 (GBP) |
Organisation | Start Network |
Sector | Charity/Non Profit |
Country | United Kingdom |
Start | 03/2020 |
End | 12/2020 |
Description | Exploiting environmental data for food security in Africa: a new rainfall dataset for monitoring and early action |
Amount | £160,351 (GBP) |
Organisation | University of Reading |
Sector | Academic/University |
Country | United Kingdom |
Start | 07/2019 |
End | 07/2021 |
Description | GCRF - financial instruments for resilience |
Amount | £343,529 (GBP) |
Funding ID | NE/R014116/1 |
Organisation | Natural Environment Research Council |
Sector | Public |
Country | United Kingdom |
Start | 01/2018 |
End | 12/2019 |
Description | GCRF African Science for Weather Information and Forecasting Techniques (African SWIFT) |
Amount | £7,971,410 (GBP) |
Funding ID | NE/P021077/1 |
Organisation | Natural Environment Research Council |
Sector | Public |
Country | United Kingdom |
Start | 09/2017 |
End | 12/2022 |
Description | INtegrated FORecasting for Mitigation of risk |
Amount | £152,782 (GBP) |
Organisation | UK Department for International Development |
Sector | Public |
Country | United Kingdom |
Start | 01/2020 |
End | 12/2020 |
Description | Agricultural decision support |
Organisation | One Acre Fund |
Country | Kenya |
Sector | Charity/Non Profit |
PI Contribution | We have collaborated with the One Acre Fund to develop a methodology for supporting farmers' decisions on planting date. If field trials are successful, this information will be disseminated to farmers via text message. |
Collaborator Contribution | The partners have provided extensive datasets of planting date and yield, which have enabled us to carry out an ex ante study of the potential of the decision support to improve yield. |
Impact | Internal reports on the potential added value of the decision support. These will be developed into field trials. |
Start Year | 2017 |
Description | Decision support for international organisations |
Organisation | International Committee of the Red Cross |
Department | Kenya Red Cross Society |
Country | Kenya |
Sector | Charity/Non Profit |
PI Contribution | We have provided international organisations , including the Red Cross and World Food Programme with impact relevant forecasts, which have enabled them to release funds during droughts in Africa. |
Collaborator Contribution | Our partners have provided a 'route to impact' for our research through their core activities of enabling poor farmers to weather drought. |
Impact | Provision of impact relevant forecasts has facilitated the release of WFP funds in Zambia, as part of the R4 insurance programme Soil moisture forecasts developed in these research projects have informed the development of early action protocols by the Red Cross |
Start Year | 2018 |
Description | Decision support for international organisations |
Organisation | World Food Programme (Italy, Sudan, Senegal) |
Country | Italy |
Sector | Charity/Non Profit |
PI Contribution | We have provided international organisations , including the Red Cross and World Food Programme with impact relevant forecasts, which have enabled them to release funds during droughts in Africa. |
Collaborator Contribution | Our partners have provided a 'route to impact' for our research through their core activities of enabling poor farmers to weather drought. |
Impact | Provision of impact relevant forecasts has facilitated the release of WFP funds in Zambia, as part of the R4 insurance programme Soil moisture forecasts developed in these research projects have informed the development of early action protocols by the Red Cross |
Start Year | 2018 |
Description | Partnerships with the insurance industry |
Organisation | African Risk Capacity |
Country | South Africa |
Sector | Charity/Non Profit |
PI Contribution | 1. The Investigators worked closely with the financial sector to improve insurance provision for African farmers. This has resulted in extending insurance to more than 1M farmer households in Zambia. 2. The Investigators have also collaborated with the Africa Risk Capacity to incorporate NCAS/University of Reading datasets into the Africa Risk Viewer (ARV), and supported ARC with the use of these data for informing the release of aid across Africa. 3. The Investigators have provided software to PULA Advisors for objective diagnosis of the onset of the rainy season in southern Africa. This has improved the quality of PULA's replanting insurance products. 4. Drought predictions and drought monitoring information, provided by the Investigators, are being incorporated into the World Food Programme seasonal monitoring bulletins for southern Africa. |
Collaborator Contribution | The partners have co-developed datasets and products (as described above), and provided feedback on their utility for decision making. |
Impact | Over 1 million farmers are now insured in Zambia using TAMSAT data and products. These farmers received pay outs that have helped them weather several years of poor weather. |
Start Year | 2015 |
Description | Partnerships with the insurance industry |
Organisation | INFORM GmbH |
Country | Germany |
Sector | Private |
PI Contribution | 1. The Investigators worked closely with the financial sector to improve insurance provision for African farmers. This has resulted in extending insurance to more than 1M farmer households in Zambia. 2. The Investigators have also collaborated with the Africa Risk Capacity to incorporate NCAS/University of Reading datasets into the Africa Risk Viewer (ARV), and supported ARC with the use of these data for informing the release of aid across Africa. 3. The Investigators have provided software to PULA Advisors for objective diagnosis of the onset of the rainy season in southern Africa. This has improved the quality of PULA's replanting insurance products. 4. Drought predictions and drought monitoring information, provided by the Investigators, are being incorporated into the World Food Programme seasonal monitoring bulletins for southern Africa. |
Collaborator Contribution | The partners have co-developed datasets and products (as described above), and provided feedback on their utility for decision making. |
Impact | Over 1 million farmers are now insured in Zambia using TAMSAT data and products. These farmers received pay outs that have helped them weather several years of poor weather. |
Start Year | 2015 |
Description | Partnerships with the insurance industry |
Organisation | Pula Advisors |
Country | Switzerland |
Sector | Private |
PI Contribution | 1. The Investigators worked closely with the financial sector to improve insurance provision for African farmers. This has resulted in extending insurance to more than 1M farmer households in Zambia. 2. The Investigators have also collaborated with the Africa Risk Capacity to incorporate NCAS/University of Reading datasets into the Africa Risk Viewer (ARV), and supported ARC with the use of these data for informing the release of aid across Africa. 3. The Investigators have provided software to PULA Advisors for objective diagnosis of the onset of the rainy season in southern Africa. This has improved the quality of PULA's replanting insurance products. 4. Drought predictions and drought monitoring information, provided by the Investigators, are being incorporated into the World Food Programme seasonal monitoring bulletins for southern Africa. |
Collaborator Contribution | The partners have co-developed datasets and products (as described above), and provided feedback on their utility for decision making. |
Impact | Over 1 million farmers are now insured in Zambia using TAMSAT data and products. These farmers received pay outs that have helped them weather several years of poor weather. |
Start Year | 2015 |
Description | Partnerships with the insurance industry |
Organisation | World Food Programme (Italy, Sudan, Senegal) |
Country | Italy |
Sector | Charity/Non Profit |
PI Contribution | 1. The Investigators worked closely with the financial sector to improve insurance provision for African farmers. This has resulted in extending insurance to more than 1M farmer households in Zambia. 2. The Investigators have also collaborated with the Africa Risk Capacity to incorporate NCAS/University of Reading datasets into the Africa Risk Viewer (ARV), and supported ARC with the use of these data for informing the release of aid across Africa. 3. The Investigators have provided software to PULA Advisors for objective diagnosis of the onset of the rainy season in southern Africa. This has improved the quality of PULA's replanting insurance products. 4. Drought predictions and drought monitoring information, provided by the Investigators, are being incorporated into the World Food Programme seasonal monitoring bulletins for southern Africa. |
Collaborator Contribution | The partners have co-developed datasets and products (as described above), and provided feedback on their utility for decision making. |
Impact | Over 1 million farmers are now insured in Zambia using TAMSAT data and products. These farmers received pay outs that have helped them weather several years of poor weather. |
Start Year | 2015 |
Description | International workshop on Weather Index Insurance |
Form Of Engagement Activity | Participation in an activity, workshop or similar |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Industry/Business |
Results and Impact | International workshop for key players in the weather index insurance industry. |
Year(s) Of Engagement Activity | 2016,2017 |