Creating positive synergies between risk management and transfer to accelerate food system climate resilience

Abstract

Climate change will significantly impact the future viability and security of food production systems, with increased frequency and intensity of droughts, floods, storms and other extreme climatic events predicted in many regions. In order for food production systems to remain viable and resilient under a changing climate, novel approaches, which integrate risk management (i.e. adaptation) and risk transfer strategies, such as insurance, are required. We argue that the coordinated integration of risk management and risk transfer approaches will support greater resilience of food production systems under climate change. Conversely, if risk management and risk transfer strategies are not carefully integrated, there is potential to undermine adaptive capacity (e.g. insurance subsidies may dissuade farmers from investing in climate adaptation) and ultimately reduce the capacity of food production systems to cope with and recover from the adverse impacts of climate change. Here we propose a resilience-based conceptual framework for integrating risk management and risk transfer strategies along with four key principles, which we believe could underlie their successful integration and thus enhance food production system resilience under climate change. These are as follows: (1) pro-active investments in farmer climate adaptation rather than re-active disaster relief, (2) structuring of government subsidies around insurance and climate disaster relief to incentivise farmer climate adaptation, (3) rewarding farmer efforts towards climate adaptation with cheaper insurance premiums for those farmers that invest resources into climate adaptation and (4) recognising investments in the integration of farm climate adaptation and risk transfer schemes within the broader context of future climate disaster risk management and global food security. Such an integrated investment approach could substantially reduce future economic losses for farmers while also enhancing food security under climate change.

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Acknowledgements

Special thanks to Julian Roberts from Willis Towers Watson for his valuable comments.

Funding

This research is funded through the Queensland Government’s Drought and Climate Adaptation Program (DCAP) and the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) through the International Climate Initiative (IKI). This work was also implemented as part of the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS), which is carried out with support from CGIAR Fund Donors and through bilateral funding agreements. For details, please visit https://ccafs.cgiar.org/donors. David Cobon is supported by the Northern Australia Climate Program funded by Meat and Livestock Australia Donor Company, DCAP and the University of Southern Queensland.

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Correspondence to Shahbaz Mushtaq.

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Mushtaq, S., Kath, J., Stone, R. et al. Creating positive synergies between risk management and transfer to accelerate food system climate resilience. Climatic Change 161, 465–478 (2020). https://doi.org/10.1007/s10584-020-02679-5

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Keywords

  • Climate change
  • Adaptation
  • Risk transfer
  • Extreme climate
  • Drought
  • Resilience
  • Insurance