MainDB: Horn of Africa Risk Transfer for Adaptation (HARITA)

Title: Horn of Africa Risk Transfer for Adaptation (HARITA)
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NWPTypeOfOrganization: Non-governmental organization (NGO); Private sector
NWPGeographicRegion: Africa
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Adaptation element: Financial support; Impact assessment; Science and research
Adaptation sector/theme: Agriculture; Food security; Biodiversity; Disaster risk reduction
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Country: Ethiopia
NWPDataSource: PSI
Description: For the 1.3 billion people living on less than a dollar a day who depend on agriculture for their livelihoods, vulnerability to weather-related shocks is a constant threat to security and well-being. As climate change drives an increase in the frequency and intensity of natural hazards, the challenges faced by food-insecure communities struggling to improve their lives and livelihoods will also increase.
 
In response to these challenges, Oxfam America, Swiss Re and their partners developed a holistic risk management framework to enable poor farmers in the drought-prone northern state of Tigray in Ethiopia to strengthen their food and income security through a combination of community climate resilience projects (risk reduction), insurance (risk transfer), microcredit ("prudent" risk-taking), and savings (risk reserves): the Horn of Africa Risk Transfer for Adaptation (HARITA) project.
 
Existing approaches to providing drought insurance to the poorest have not been effective due to high administrative costs and the inability of cash-poor smallholders to afford premiums. Instead, an “insurance-for-work” program was developed as an add-on to the government’s “food-and cash-for-work” Productive Safety Net Program (PSNP), a well-established program that serves eight million chronically food-insecure households in Ethiopia. The Ethiopian National Meteorological Agency also played a strong role in supporting weather data collection and analysis for the weather index insurance.
 
The resulting innovation allows cash-poor farmers the option to work for their insurance premiums by engaging in community-identified projects to reduce risk and build climate resilience, such as improved irrigation or soil management. In the event of a seasonal drought, insurance payouts are triggered automatically when rainfall drops below a pre-determined threshold, enabling farmers to afford the seeds and inputs necessary to plant in the following season and protecting them from having to sell off productive assets to survive. In partnership with local microfinance institutions, the model allows farmers the option to bundle insurance with credit and savings.
 
The labor used to pay for weather index insurance is contributed to community-identified projects to reduce risk and build climate resilience, such as improved irrigation or soil management. Farmers identify these activities through community-driven Participatory Capacity and Vulnerability Assessments.
 
HARITA’s success has led Oxfam America and the World Food Programme (WFP) to announce the R4 Rural Resilience Initiative as a strategic collaboration to expand the HARITA model in Ethiopia and adapt the model to other countries. Swiss Re is providing financial support and technical expertise as the partnership’s exclusive insurance sector sponsor, and also acts as the reinsurer for the project.
Expected outcome: In its three of years of delivery in Ethiopia, HARITA has shown promising results for replication. The project has scaled from two hundred households in one village in 2009 enrolled in the financial package, to over 13,000 enrolled households in 43 villages in 2011 – directly affecting approximately 75,000 people.
 
More prosperous farmers will pay their insurance premiums in cash. Over time, as the poorest farmers become more prosperous, they can "graduate" from the need to pay through labor, and begin paying in cash, helping to ensure the project’s commercial viability and long-term success.
 
The R4 Rural Resilience Initiative will unite the HARITA model with WFP’s extensive network of safety nets and cash-for-work programs, in close coordination with local partners and government agencies. Under R4, WFP programs will operate as “insurance-for-work” for the poorest of the participating farmers, leveraging this core HARITA innovation to build a profitable market for small-scale agricultural insurance at commercial scale.
 
From a donor perspective, the R4 model doubles investment value: while a certain dollar amount of aid could be used in “traditional” development programs either to pay an insurance premium or to pay farmers to carry out risk reduction measures, in this project, the same amount of money yields insurance and risk reduction simultaneously. By working in diverse microclimates, R4 allows insurance companies to diversify risk and open up new markets. This will attract additional insurance and reinsurance companies to the agricultural market in developing countries. In turn, farmers will benefit from an increasingly broad array of insurance products from which to choose and competitive pricing that should bring down premium rates over time.
Further information: For further information go to: https://www.oxfamamerica.org/explore/research-publications/managing-risks-to-agricultural-livelihoods-impact-evaluation-of-the-harita-program-in-tigray-ethiopia-20092012/
Find the case study summary here: https://unfccc.int/files/adaptation/application/pdf/swiss_re.pdf
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NWPPartner: Swiss Reinsurance Company Ltd; Oxfam America
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NWPOutcome: The main conclusion of the study is that HARITA is achieving the critical objective of helping farmers to maintain their livelihoods in the face of drought, thereby addressing an urgent threat to livelihoods in the drought-prone region of Tigray. On average, across all villages included in the evaluation, farmers insured through HARITA have increased their savings and the number of oxen, the most valuable animal and the main animal used to plough the fields, relative to uninsured farmers. The impacts differ considerably across the 3 evaluated districts, and our data does not suggest that each of the average effects has occurred in each district. In one district, insured farmers increased their levels of grain reserves more than did uninsured farmers. In another district, insured farmers increased the number of oxen owned relative to the uninsured. The number of oxen declined slightly among the uninsured. In a third district, insured farmers increased the number of loans and amounts borrowed relative to the uninsured.

 
HARITA is also having some impacts on investments in production in good seasons. We do not yet see evidence of corresponding increases in yields. Lack of increases in yields is not surprising in the second evaluated season due to the drought. On average, across all evaluated villages, insured farmers have increased the amount of compost that they use per unit of land relative to uninsured farmers. In addition, in one of the three districts insured farmers increased their investments in fertilizer and traditional seeds relative to uninsured farmers. Farmers in the other two districts increased their investments in fertilizer and improved seeds relative to uninsured farmers but only in the 2010 season, not over the entire evaluation period. Female- headed households, who are among the more vulnerable farmers, seem to be achieving some of the most significant increases in agricultural inputs among the participants. If such productive investments continue to grow, they will contribute to building the farmers’ resilience to droughts.


 

Based on interviews and FGDs with farmers and village leaders, we learned that farmers consider knowledge about new agricultural production inputs and techniques to be the most valuable contribution made by HARITA. We do not characterize the improvement in knowledge as an impact of the program since the knowledge comes primarily from the Ethiopian agricultural extension service, which works closely with HARITA but also works with farmers in non-HARITA villages. However, it is useful for program design to understand the importance of working closely with a capable extension service, as HARITA is doing.

 

Farmers and village leaders overwhelmingly affirm the value of HARITA in helping to reduce the hardships imposed by droughts, and they express tremendous appreciation for the program. Almost all also agree that HARITA is not yet improving livelihoods in a transformative way. Improving living standards is an ambitious goal that requires time, and it is too early to assess whether the program in its current form can achieve this goal.

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Created at 21/04/2016 11:45 by Roberto Felix
Last modified at 11/05/2022 03:29 by Nicholas Hamp-Adams
 
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