Mitigating Weather Risk

  • Date Posted: June 2, 2010
  • Authors: John Jespen
  • Organizations/Projects: DAI
  • Document Types: Primer or Brief
  • Donor Type: U.S. Agency for International Development

This RAFI (Rural & Agricultural Finance Initiative) Note discusses a relatively new insurance product, index-based insurance, as a promising solution to mitigate highly correlated weather risk. Index-based insurance mitigates weather risk to agricultural-based households and can also mitigate risk to private-sector financial institutions; removing a primary constraint to finance in rural areas and to agricultural enterprises.