By Giriraj Amarnath
Farmers who took part in a high-tech flood insurance scheme in Bihar, India, shared a total payout of INR 7.52 lakhs (USD $10,500) following the 2019 monsoon. The season, which runs from June to September, brought devastating floods to large parts of India, Bangladesh and Nepal. In Bihar, 13 districts were affected, including Muzaffapur, where the insurance trial was conducted during July. Two hundred and sixty nine households in Katara and Gaighat blocks were insured through the scheme, paying a total premium of INR 338,843 (USD $4,462). Farmers from 150 of these households received payouts, enabling them to repair their homes and replant crops quickly.
Over the past 40 years, floods have accounted for around half of all disasters globally, affecting, on average, 27 million people every year. The Index-Based Flood Insurance (IBFI) product was created to help reduce the impacts of floods on India’s poorest farmers. It was developed jointly by the Indian Council of Agricultural Research (ICAR) and the CGIAR Research Programs on Climate Change, Agriculture and Food Security (CCAFS – led by the International Center for Tropical Agriculture [CIAT]) and Water, Land and Ecosystems (WLE – led by the International Water Management Institute [IWMI]).
The product combines 30 years of historical flooding data, hydrological modeling and 10m-resolution satellite images from the European Space Agency. In the case of a flood event, current rainfall data for the river catchment in question is added to the model, which shows how run-off will travel and collect. If a trigger water level is reached for a particular area, the scientists use satellite images to verify the depth and duration of the flood. This accurately identifies those farmers who are eligible for compensation.
Index-based insurance presents a means of reducing risk for poor rural farmers. This is particularly important at the current time, given the pandemic’s wide-ranging impacts and how climate change is increasing the number and intensity of extreme weather events. Using satellite data in the IBFI to verify depth and duration of flooding negates the need for labour- and time-intensive field visits, which means premiums can be kept low. Expanding such insurance schemes across large rural areas could help bolster farming livelihoods, reduce post-disaster costs for governments, and contribute to the United Nations Sustainable Development Goals of reducing poverty, achieving gender equality and underpinning food security.