Designing a parametric flood and drought insurance framework for Caribbean farmers and agricultural SMEs: Case studies of Belize and Saint Vincent and the Grenadines

This study examines the vulnerability of Caribbean agriculture to weather shocks and develops an innovative parametric flood and drought insurance framework focused on smallholder farmers and agricultural Small and Medium Enterprises (SMEs) in Belize and Saint Vincent and the Grenadines. The methodology includes a review of existing regional and international insurance schemes, empirical analysis using precipitation and export data from 2000–2019, and the formulation of dual-trigger mechanisms for excess and deficit rainfall. The overall scope addresses both technical and structural challenges across the Caribbean, contextualizing the insurance within broader disaster risk financing and climate resilience frameworks.

Key findings confirm the financial viability of parametric triggers for floods and droughts, showing explicit need for coverage and rapid post-disaster support. Authors recommend developing bespoke meso-level parametric insurance targeting farmers; integrating blockchain with APIs and smart contracts for transparency and efficiency; securing reinsurance through catastrophe bonds; and enhancing resilience via layered risk management and regional cooperation. The framework strengthens rural livelihoods, promotes food security, and aligns insurance deployment with the 2030 Sustainable Development Agenda. It addresses persisting gaps in micro-level drought coverage and calls for insurance designs that minimize basis risk, improve financial literacy, and support both public policy and individual resilience within Caribbean Small Island Developing States.