ST. JOHN’S, Antigua & Barbuda: The World Bank is prepared to provide technical advice to the Caribbean in an effort to develop a disaster risk management strategy for the region’s agriculture sector.
The offer of assistance was extended by senior economist at the World Bank, Dr. Carlos Arce, while speaking at the Caribbean Agriculture Insurance Symposium, which concluded last weekend in Antigua.
Arce said the region needs to create a disaster management framework that is feasible, efficient and transparent, and easily monitored. He also said the World Bank, within the past decade, had itself been seeking an optimal insurance strategy for agriculture that was cost effective, reached small farmers, covered a wide range of risks, and was easy to administer and operate.
Arce said the World Bank had found that the index-insurance mechanism used in the energy sector in the United States is useful. That method measures the impact of weather risks, using a weather index such as rainfall to determine payouts, rather than the consequence of weather variability, such as crop failure.
Acre said countries like India, Malawi and Nicaragua had already “tested the waters” and had recorded some success and the World Bank was willing to share its experience with technical experts and policy makers in the region, to complement efforts currently underway towards the development and management of an efficient agricultural insurance scheme.
The economist said that while the concept of index insurance was “very simple”, modeling it was technically challenging and complex, and required huge technical and financial support for its implementation including significant buy-in by the public sector for its sustainability.
Arce said that among the challenges to its implementation in the region were the number of varieties of agricultural crops – as each crop had varying levels of resilience to weather events – and the number of small farmers in remote areas.
However, he suggested that small farmers could be covered through a public sector initiative in which governments pool the small farmers’ risks and function as the policy holder.