On July 20th, Oxfam America (OA) and the United Nations World Food Programme (WFP) released the R4 Rural Resilience Initiative report for the first quarter of 2017. R4 is a joint undertaking between the two organizations, designed in 2011 as a response to increased climate volatility and its malignant effect on rural agriculture. The term “R4” refers to a combination of four strategies aimed at increasing resilience in food insecure communities: “risk reduction”, including implementation of Food Assistance for Assets (FFA) programs and development of resilient infrastructure, “risk transfer” through insurance and training, as well as “prudent risk taking” in the form of microcredit and diversification of livelihoods, and “risk reserves” or savings.
In 2016, R4 insured 42,000 farmers for a total sum of $5.1 million. This quarter marked the introduction of the program into Kenya, which joined Ethiopia, Zambia, Malawi, and Senegal.
In recent years, extreme weather has affected growing seasons and crop yields, and the World Food Programme predicts a “20 percent increase in the risk of hunger and malnutrition […] by 2050 if people’s climate resilience is not improved”. One of the R4 tactics for increased resiliency is index insurance, which ties payouts to a predetermined index such as rainfall, temperature, or crop yield. In the event of a severe weather or climate-change event, a previously agreed-upon index is used to determine payouts. For example, an agreement might be based on rainfall levels, and when rainfall does not meet the threshold requirement, farmers will be paid regardless of actual crop yield.
This agreement removes the need for initial and damage-related assessments, in theory minimizing transaction costs and making insurance more affordable for farmers and allowing payments to be made more quickly.
In Malawi, 90% of the population depends on rain-fed agricultural products, and 54% of the population experiences year-round food insecurity. When El-Niño conditions exacerbated the effects of drought last year, many farmers saw a significant reduction in their crop yield. Malawi’s Minister of Agriculture estimated that more than half of the population would have insufficient food as a result of the drought later in the year.
The idea behind the index insurance component of R4 is that through payouts, farmers are better equipped to adapt and recover from climate events. However, critics of index insurance warn of its false promise. In November of 2016, a third of Malawi’s population still needed drought relief that the country’s index insurance policy was unable to provide, due to modeling issues. In an after-disaster report published in May of this year, ActionAid called the eventual payout “too little, too late.”
The R4 Rural Resilience Initiative continues to grow in Malawi, with plans to expand the program to other districts. The report published last month cites the goal of insuring 500,000 farmers by 2020.
Sources and Further Reading
R4 Rural Resilience Initiative – Oxfam
Climate volatility deepens poverty vulnerability in developing countries – Purdue University
Food Assistance for Assets – World Food Programme
Index Insurance: Frequently Asked Questions – International Finance Corporation
Climate change in semi-arid Malawi: Perceptions, adaptation strategies and water governance – University of Malawi
Insurance relieves drought affected farmers in Malawi – United Nations