Climate change = hunger
Sea levels are rising. While deserts grow, arable land is shrinking. There is too much or too little rain. Floods, storms and droughts destroy land, livestock, food stocks and harvests. For smallholder farmers, this is particularly disastrous. People lose their livelihoods or even lives. Women and children suffer the most. Climate change is one of the biggest causes of hunger.
Climate change increases the intensity and frequency of disasters. For poor families, even small weather fluctuations are often catastrophic. Their harvests decay, animals drown and fields dry up. Resorting to drastic measures to survive, they eat less and worse. Many must sell everything they own: animals, equipment, land. They can no longer afford to send their children to school. This vicious circle of weather disasters, hunger and poverty can be put in numbers:
- 90 percent of natural disasters are floods, storms or droughts. Since the early 1990s, the frequency of these extreme weather events has doubled.
- 95 million acutely malnourished people live under extreme climatic conditions. That is 76 percent of all people who experience acute levels of malnutrition.
- If global temperatures rise by 2 degrees Celsius, the number of people pushed into hunger could reach an estimated 189 million. At 4 degrees Celsius this number could even jump to 1.8 billion.
Climate change = solvable
Scientific research has proven that climate change is largely driven by human activity. But the science also agrees: we have the power to put this right.
How does WFP tackle climate change?
Beyond that, WFP works with governments, communities and partners to accurately analyse the climate and better understand the link between climate change and hunger. These data lay the foundation for an exact planning of future aid programmes.
WFP shares its knowledge and data with governments in the form of political and technical cooperation so that they can develop their own solutions and help themselves in the future.
WFP draws on an entire toolbox of innovative instruments: from low-tech solutions such as fuel-efficient stoves and community vegetable gardening, to social safety nets, weather insurances, high-tech satellite and drone imagery, and mobile early warning systems.
Germany is not only the second largest government donor to WFP, but also a pioneer in climate financing. With the courage to innovate, Germany is financing three new climate initiatives by WFP and its partners, with more than EUR 30 million. These grants are disbursed throughout a period of several years, enabling WFP to plan more efficiently and with greater foresight.
1. Proactive instead of reactive: forecast-based financing
Humanitarian aid is no exception: the earlier a risk is responded to, the better and more efficient the response is. Climate disaster preparedness is highly effective and impactful. One calculation clearly illustrates that: every US Dollar invested in disaster prevention and risk management — for example in early warning systems, better weather forecasts and protective infrastructure such as dams — saves up to four US Dollars in humanitarian aid after a disaster.
Forecast-based financing, i.e. the financing of aid measures based on forecasts, allows the local population and aid workers to roll out targeted humanitarian assistance, even before the disaster strikes.
WFP can therefore manage risks instead of responding to emergencies. WFP can act instead of reacting.
How does forecast-based financing work? Put simply, it starts with an accurate analysis of the risk that climate shocks pose to people’s food security. Together with governments and the affected population, WFP determines what needs to be done in the event of a disaster such as drought or flooding. For example, in the event of a flood, food stocks need to be stored in a safe place, and farming equipment and livestock must be rescued. Certain limits and thresholds are defined: what precipitation levels in the rainy season indicate the likelihood of a severe drought? If these previously agreed thresholds are exceeded, the aid response can be started even before the onset of a disaster. This reduces both the cost of aid and the negative impacts of the event.
In a remarkable pilot project by WFP in Nepal, forecast-based financing reduced the cost of emergency aid for 175,000 people in flood-prone areas, from US$ 32 million to only US$ 10 million. How? The flood alert reached those affected 15 days earlier instead of the usual 5 hours, reducing the number of unprepared people. Emergency relief was faster and more efficient due to less damaged infrastructure and to the procedures and measures which had been agreed upon before the disaster. People could protect their livelihoods in time and start reconstruction quicker.
The German Federal Foreign Office is supporting WFP’s forecast-based financing with EUR 7 million between 2015 and 2020 in Nepal, the Philippines, Bangladesh, Haiti and the Dominican Republic.
2. Better insured: ARC Replica
What helps in the event of damage? Insurance, if covered. So-called macro-insurances operate with the same basic principle, but on a much larger scale. The brilliant thing is that instead of individuals insuring themselves, states and now humanitarian organizations such as WFP can insure people in need against climate risks, such as droughts. This is precisely the idea behind ARC Replica. But lets start from the beginning:
ARC stands for African Risk Capacity (ARC) — a climate risk insurance of the African Union, through which African states can purchase insurance policies against drought. The innovative feature is that these insurance policies are automatically distributed if — similar to forecast-based financing — a predefined threshold (the so-called index) is exceeded. Latest technologies are used to monitor the index. Satellite imagery, for example, is analysed to monitor precursors of looming droughts, such as a vegetation decline. If the index is met and the insurance is paid out, assistance is more efficient because WFP has developed an operational plan with the government for each covered country, to ensure that the humanitarian assistance can be rolled out smoothly. This plan describes how resources and aid will be distributed in the event of a disaster. When the plan is put into action, families in need receive aid quicker and can escape from the vicious circle of hunger and poverty.
What is new about ARC Replica? It is now possible for humanitarian organisations to take out a replica — i.e. an equivalent copy — of these ARC insurances on behalf of people in need. This has the advantage that governments closely coordinate their risk analyses and emergency preparations with relief agencies. And through knowledge exchange, everyone learns from each other.
With ARC, African states can insure themselves against climate risks in solidarity with each other. With the ARC Replica, international aid organizations can now help those affected by climate change through insurance. The first countries to benefit from the insurance replica — via WFP — are Mauritania and Mali. Both countries are prone to drought.
“The Replica pilot is an excellent example of how WFP and governments can pool expertise and innovative financing to provide early and coordinated response in the face of shocks, thereby contributing to national preparedness and response efforts,” says Jean-Noël Gentile, WFP Country Director in Mauritania.
“This is absolutely critical in the Sahel, where early interventions before the peak of the lean season have the potential to reduce the human and livelihood costs of droughts.”
The German Federal Ministry for Economic Cooperation and Development (BMZ) is supporting ARC Replica with EUR 10 million, which will be provided to WFP and Start Network via the German development bank Kreditanstalt für Wiederaufbau (KfW) in 2018 and 2019.
3. Prevention instead of treatment: R4 Rural Resilience Initiative
The R4 Rural Resilience Initiative — or R4 — reverses the idea of ARC by directly providing climate risk insurance to smallholder farmers. In contrast to the macro insurance ARC Replica, R4 is a so-called micro-insurance because it is individuals that take out insurances instead of states or humanitarian organizations. Through an innovative approach, even poor smallholder farmers who cannot afford the insurance can acquire a policy in return for their labour and eventually escape poverty. How does this work?
R4 gets its name from the combination of four risk management strategies. As many smallholder farmers do not have enough income to afford insurance, this is where R4 comes in. Farmers receive an insurance policy through WFP in exchange for their participation in a community project. They build infrastructure for better resource management, such as arable terraces or irrigation systems. That way, their work also promotes the resilience of their communities. The first step is, therefore, to minimise the risk.
If a climate shock, such as a drought, hits and harvests fail, the second step is triggered: the insurance is paid out. The farmers do not need to desperately sell their livelihoods, such as livestock or agricultural equipment. They no longer merely treat the issue, they have prevented it. Step two therefore, transfers the risk to the insurance company.
As smallholder farmers are now protected against crop failures and have access to cheaper loans through the programme, they can invest in seeds, fertilizers or new technologies, which increase their productivity. Thus, the third step helps to enable investments or to take moderate risks.
Increased productivity and security allow participants to build savings. This not only strengthens their resilience against climate shocks, but even in the event of illness or death, families are no longer dependent on help. The R4 programme in Ethiopia has shown that smallholder farmers with insurance could save more than twice as much as those without it. And they could invest their savings. Step four therefore, helps to build up risk reserves.
The finesse of R4 is that smallholder farmers build up reserves in the last step and thus contribute to the first step of risk reduction. This enables them to take out their own insurance in the medium term, exit the programme and operate independently.
By 2018, R4 had already reached over 100,000 smallholder farmers (and thus around 500,000 people) in Ethiopia, Kenya, Senegal, Malawi, Zambia and Zimbabwe. Around US$ 1.5 million in insurance benefits were disbursed to compensate for weather-related losses. Thanks to BMZ funding of EUR 20 million over five years, which will be provided to WFP via KfW, R4 can now be expanded in Ethiopia from around 30,000 to 185,000 smallholder farmers (and thus around 1 million people) over the period of five years.