FESA drought microinsurance for every African farmer
EARS website, September 2010
Food Early Solutions for Africa (FESA) is a millennium effort commissioned by the Netherlands Minister of Development Cooperation. The project aims to develop and implement a large scale, low cost drought insurance approach that reaches every farmer in Africa. It is carried out by EARS Earth Environment Monitoring in cooperation with RABO Development and Ecorys.
EARS receives hourly visual and thermal infrared Meteosat data and with support of Eumetsat and the Netherlands Meteorological Service, a 30 years historical database has been composed. All this data is continuingly being processed for the temperature, evapotranspiration and precipitation data fields. The data has continental coverage and 3 km spatial resolution. Alternative drought indices have been considered, data properties have been investigated and burn studies have been carried out for 29 locations in Tanzania. The first phase of the project is complete and results have been consolidated and published in the report "FESA microinsurance: Methodology, validation, contract design".
The study concludes Meteosat Relative Evapotranspiration (RE) to be the most suitable drought index with the lowest basis risk. RE represents water use by the crop and is closely related to crop growth. Though often used, precipitation (PREC) is considered less suitable, as it precedes crop growth by months and its fate is unknown. An advantage of the new RE index is its normal distribution, which allows triggers to be easily predicted.
The FESA approach offers high potential for insurance scaling up and corresponding economies. To this end a climatic zoning approach will be followed, where each zone is characterised by a specific sowing window and a specific RE-trigger derived from the historic database. In this way a single, fixed premium, parametric contract becomes feasible, where only the location/zone of the insured has to be determined and the contract parameters are then read from a table.
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