Climate-Resilient Rice Commercialization Sector Development Program – Feasibility study and piloting for Weather Indexed Crop Insurance (WICI) Scheme

Sep 26, 2019

Description of Project:

 

The establishment of crop insurance is new in Cambodia. Initially the consultant will raise awareness of the key stakeholders including the decision makers within Rice-SDP9, in order to establish a basic understanding about the principles and the regional experience of crop insurance. Weather data collection, analysis and monitoring infrastructure and capacity includes assessment of the current status of weather data and monitoring infrastructure and operational capacity and the reliability and quality of weather data. This will include an assessment of the density, security, and quality of the weather station network, including an assessment of the existence and operational capability of the existing network of automated stations that report daily to a central Meteorology (MET) Node and are linked to World Meteorology Organization/Global Telecommunication System (WMO/GTS), in case such a link exists. Based on the assessment, recommendations will be made to upgrade the network, if needed, to a standard necessary for the operation of Weather Indexed Crop Insurance (WICI).

 

Description of actual services will be provided by our organization:

– Assessment of the availability and access to sound agronomic data is required, to assess the level of crop vulnerability needed to design an index that will truly be representative of loss, specific to crops and in relation to the specific varieties being planted. This information, once analyzed, will help determine if the whole crop system is amenable to indexing. Alternate options may also need to be explored.

– Assessment of availability and access to financial data will be needed to calculate the level of loss per farmer across the area (the selected subproject area) to be covered by the index. This will cover (i) input costs that are based on input usage and unit cost for those inputs; (ii) credit amount as a factor of input costs plus any additional financing that the farmer requires; and (iii) loss of income based on the lost production and a set value per unit of production. Therefore, data will be required on input costs, costs of labor, interest rates, and so on. The willingness of farmers to pay or their willingness to participate in each modeling must be assessed as well.

– Institutional assessment of the status of the local insurance industry and relevant public sector and private sector institutions, in terms of structures, capacities, experience to underwrite WICI policies, will be undertaken. This will include assessment of capacity building needs, technical assistance that may be required, and willingness of the relevant institutions in offering such services/products.

– Assessment of the current legal and regulatory framework relevant to crop insurance, including weather index-based scheme, should such a system be in place, will be undertaken. In case such a system does not exist, it will be necessary to make recommendations regarding the establishment of a legal and regulatory framework conducive to WICI. The assessment will clearly identify the prerequisites necessary for pilot testing and the need for strengthening the existing frameworks to facilitate pilot testing in selected areas.

– Stakeholder consultation will be undertaken to assess the willingness or otherwise of key stakeholders among the public or private sector agencies, including farm input providers, NGOs or civil society organizations and the potential farmers’ beneficiaries. Since implementation of a WICI product requires coordination of a large number of stakeholders and a larger number of activities to be undertaken, the above assessment will facilitate the identification of key players/institutions that will be most appropriate for its implementation. The assessment will also include a study of existing capacities of the delivery channels and identification of deficiencies that should be addressed. Based on this assessment, a determination will be made as to the most appropriate delivery mechanisms and the institutions that will be responsible.

– The Feasibility Study (FS) will consider all possible options for operation of the WICI, which will, among others, include (a) public sector administered with the involvement of other government agencies with details for their internal collaboration; (b) public private partnership, identifying the partners that would be willing to participate; (c) completely private sector (insurance entity), either national or international or bilateral collaboration; or (d) setting up of a Trust Fund operated under a PPP arrangement and overseen and supervised by a Trust Fund Committee representing the public sector, private sector, and donors. In the context of the Trust Fund, possibilities of co-financing by other development partners would be explored. In such a case, the contributors would become members of the Trust Fund Committee.

-The FS will include the recommendations for an appropriate M&E system for reporting progress, performance monitoring and evaluation, and mechanism for internal and external audits and the arrangements for such audits.

-The FS will provide recommendation for the Implementation Arrangements for the pilot testing, including approaches, procedures and criteria for identification and selection of areas for pilot testing, procurement of materials and equipment, arrangements for upgrading the existing meteorological stations to automatic weather stations or installation of new automatic stations linked to a central node and to the relevant WMO/GTS database. The FS will also include recommendation for capacity building at the central, subproject, and local level for the system to be operational and effective.

 

 

SECTOR

Agriculture, Environment & Natural Resources / Finance & Risk

COUNTRY

Cambodia

CLIENT

Asian Development Bank (ADB); Government of Cambodia (Ministry of Economy and Finance)                

TIME PERIOD

2018  2020

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