This SEI Discussion Brief considers the suitability of agricultural insurance in protecting farmers and the agriculture sector against slow-onset risks faced in the Mekong region, where climate-related risks threaten the sector and food security. Through two case studies – sea-level rise in the Vietnamese Mekong Delta and drought in northeastern Thailand – the authors examine slow-onset risks, existing agricultural insurance strategies, and the implications for insurance feasibility in the context of a holistic risk management approach.
Agricultural insurance is increasingly considered by many governments in the region as a key approach to reducing the socio-economic impacts of disasters. Scientific research and on-the-ground experiences in many developing countries, however, suggest that agricultural insurance has limited success in protecting farmers against the economic impacts of climate-related risks. In particular, slow-onset events (such as sea-level rise, drought and rising temperatures) develop more gradually than extreme events (such as tropical storms and floods), and are more difficult to predict; therefore, providing insurance for these gradual threats is also more difficult.
The authors find that agriculture insurance in Viet Nam and Thailand have struggled financially due to high compensation rate and low voluntary uptake by farmers. The findings underscore the need to develop and implement comprehensive strategies to deal with the financial impacts of climate change, and to offer support for transformative change to build resilience in farmers and the agricultural sector as a whole.
Download the working paper on agricultural insurance (PDF, 1.84MB)