In this presentation at the June 5-10, 2017 Global Learning and Evidence Exchange for Market Systems event in Dakar, Senegal, AMA Innovation Lab assistant director Tara Steinmetz discussed the benefits and challenges of using index insurance as a means of supporting small-scale farmers facing a range of climate-related threats.

To protect remaining assets, households –especially the relatively poorer households –reduce consumption. This can lead to long-term negative impacts, particularly stunting of children under five. This, in turn, can lead to the intergenerational transfer of poverty. 

Some households may sell off remaining assets to smooth consumption, though this can place households in a poverty trap if the household no longer has the minimum assets necessary to maintain livelihoods. This can make the negative impacts of a shock last years.

Steinmetz describes two index insurance projects recently completed by the AMA Innovation Lab, one in Mali and one in Ghana. These projects found numerous benefits for index insurance, including Increased area cultivated, increased use of loans for investment and increased use of productive investments.

Learn more about the Market Systems GLEE in Senegal.