FacebookPinterestTwitterLinkedInEmail

WILD-photoFarming is – at the best of times – a risky undertaking.  For smallholder farmers in developing countries, such as Kenya, this is not the best of times. A report by Environment for Development finds that severe droughts in Kenya have interrupted rainfall partners with serious consequences such as harvest failure, deteriorating pastures, and livestock losses. [1] These losses have implications for agricultural incomes as well as local food security. It is therefore essential that smallholder farmers have access to risk management tools, such as climate data or weather insurance.

For years, insurance companies and donor organizations have been trying to develop weather-indexed insurance for smallholder farmers with limited success.  A key challenge in many countries has been the lack of accurate climate data – both current and historical.  Weather insurance requires accurate historical and current climate data so that insurance companies can develop models that allow them assess risk and set premiums.  Without accurate data, insurance premiums end up being very high – often beyond the means of a farmer to pay.  These high premiums have hindered the uptake of weather insurance products by smallholder farmers.

A new tool may help address this challenge by providing highly accurate historical and current climate data that can help lower weather insurance premiums significantly.  As a key outcome of the USAID/Kenya and East Africa PREPARED project, the GeoCLIM tool allows for much more accurate climate data by synching up inputs from both ground weather stations and satellites.  GeoCLIM was originally developed by PREPARED partners and stakeholders (including Tetra Tech, FEWS NET, USAID, ICPAC, UCSB and USGS) for use by policymakers across East Africa to address climate change and famine early warning. Resonance and PREPARED partners also envisioned its significant potential for the insurance industry – providing much-needed data required to better forecast risks and, therefore, set premiums.

Under the auspices of PREPARED, Resonance brought together national meteorological and hydrological organizations, climate scientists, technology firms, insurance companies and farmers groups to explore how GeoCLIM might underpin the development and scaling of weather-indexed insurance products targeted at smallholder farmers in Kenya and, eventually, across East Africa.  At a two-day workshop, participants used Osterwalder’s  Business Model Canvas to develop and clarify what a weather-index insurance business model might look like.[2]  Partners mapped out product offerings, channels, value proposition, relationships etc. – all the essential elements of how a weather-indexed insurance product can be offered and scaled for smallholder farmers.

With business models developed, the partners are now working to formalize a partnership that will result in the launch of a new weather-index insurance product for smallholder farmers by late 2016.  By harnessing the power of climate data, insurance companies, governments, donors and scientists are giving small holder farmers the tools they need to adapt to a rapidly changing climate.



[1] Kabubo-Mariara, Jane and Kabara, Millicent. (20145). Climate Change and Food Security in Kenya. Environment for Development Discussion Paper Series. 15-05.

[2] Osterwalder, A., Pigneur, Y., & Clark, T. (2010). Business model generation: A handbook for visionaries, game changers, and challengers. Hoboken. NJ: Wiley. Sahlman, WA (1997). How to Write a Great Business Plan. Harvard Business Review75(4), 96-108.