Seeds of Change

Time has just published my story on using insurance as a hedge against climate change.

The Tigray region in the Rockstrewn highlands of northern Ethiopia isn’t the type of place where you’d expect to find an innovative financial product. Its residents are mostly farmers, poor and vulnerable to crop failure resulting from persistent droughts. That’s precisely why the region has been chosen to serve as a test range for a new kind of insurance that could help poor countries cope with climate change.

The idea is simple. Instead of relying on food aid to help farmers after drought has hit, aid agencies can sign them up for crop insurance before disaster strikes. When the rains fail, a farmer can use a crop-insurance payout to buy food without dipping into the assets needed for the next planting. “It allows you to smooth out your income,” says David Waskow, director of the climate-change program at Oxfam America, which is coordinating the project. “Otherwise, you can fall off a cliff.”

Read the rest.