Index-based insurance for climate risk management and rural development in Syria

Abstract

Improving the adaptive capacity of rural producers to climate and weather risks may become an urgent issue in the early stages of political stabilization in Syria. Therefore, this study analyses the agro-ecological, economic and social benefits of – and the institutional challenges to – establishing index-based insurance markets to catalyse rural development in Syria. The paper examines the potential of three index insurance schemes for minimizing risk: (1) a statistical index, (2) an index based on agro-meteorological approach and (3) a remote sensing-based index. It also discusses how index-based insurance markets contribute to rural development in scenarios of increasing climate risks. The study identifies that all three insurance schemes have a very high potential to cope with increasing climate risk. Insurance schemes designed according to these indexes performed very well in terms of covering revenue losses in most of the extreme drought years observed in the country. Farmers purchasing an insurance contract may have better access to credit and find it easier to invest in agricultural production and improve productivity. Because such alternative index-based insurance programmes are low cost, they are more affordable for poor farmers and thus can potentially make an excellent contribution to economic growth in rural areas.