United Nations World Food Programme's R4 Rural Resilience Initiative - Contributing to SDG 2, 1, 13, 15 and 17
Description
The R4 Rural Resilience Initiative (R4) is a strategic partnership between Oxfam America and the World Food Programme (WFP). R4 was initiated in 2011 to respond to the challenges faced by food insecure communities enduring increasingly frequent and intense climate risks. R4 refers to the four integrated risk management strategies that strengthen farmers’ food and income security: improved natural resource management (risk reduction), microinsurance (risk transfer), support to investment, livelihoods diversification, and microcredit (prudent risk taking), and savings (risk reserves). R4 in Malawi currently reaches over 36,000 farmers (65 percent women) with its integrated approach.
As the leading humanitarian organization providing food and food-related assistance in emergencies and working with communities to improve nutrition and build resilience, it is the priority of WFP to achieve Sustainable Development Goal 2 – Zero Hunger by 2030. With our humanitarian food assistance, we provide nutritious food to those in urgent need; in parallel, an integrated set of disaster risk reduction and climate change adaptation programmes help to strengthen the longer-term resilience of communities so people do not remain caught in a vicious cycle of aid dependency. WFP is collaborating with partners to test and scale up innovative tools for providing rapid assistance to the poorest and most vulnerable farmers after a shock, helping them become more climate resilient and food-secure. WFP recognizes that in order to achieve sustainable food security, it is essential to rely on a comprehensive set of integrated risk management strategies and tools that provide an early response after a shock, while reinforcing the ability of food insecure communities to cope with future shocks. <br />
The R4 Rural Resilience Initiative is an excellent example of an integrated programme which empowers communities to manage weather shocks and adapt to the effects of climate change. R4 enables the poorest farmers to access weather and area yield index-based insurance products through investing their time in building assets or adopting improved agricultural practices. Assets built promote resilience by steadily reducing farmers’ vulnerability to shocks over time. When a drought hits, insurance payouts for weather-related losses prevents farmers from selling productive assets and stimulates a faster recovery. <br />
As part of an integrated risk management approach, microinsurance is a powerful tool for smallholders to manage climate risks and achieve resilient livelihoods, while also enabling investments and growth in the agricultural sector, supporting the effort to end hunger by 2030. Protected by insurance, household can invest in riskier but more remunerative enterprises, as well as in seeds, fertilizers and new technologies to increase their agricultural productivity, thus supporting transformative progress towards SDG2. Through protecting livelihoods against shocks and promoting investment, WFP’s microinsurance initiative contributes directly to SDG 2, however, these activities also drive progress with SDG 1 – No poverty, 13 – Climate Action, 15 - Life on Land and 17 – Partnerships to achieve the Goals. To zero hunger, it is essential to address the underlying causes of hunger while developing sustainable food systems that increase productivity, maintain healthy ecosystems and strengthen capacity for adaptation to climate change. In this context, payouts in adverse years provide individual households cash transfers for immediate food needs in the aftermath of a climate shock, preventing them from resorting to negative coping strategies. Moreover, insurance acts as incentive to invest in risk reduction activities as these have the potential to reduce the premium cost of insurance by minimizing losses during shocks. Asset creation can strengthen ecosystems and make communities more resilient to climate shocks, facilitating climate change adaptation by improving risk awareness and encouraging smallholders to adapt their farming practices to the changing risk environment.
R4 was launched in Malawi in 2015 to enable vulnerable rural households to increase their food and income security in the face of increasing climatic risks. The initiative promotes an integrated climate risk management approach based on four components: Risk reduction activities aimed at improving water and soil retention and the promotion of conservation agriculture in exchange for food or cash; Risk transfer activities oriented to facilitate the access to weather-index insurance; Savings activities promoted through Village Savings and Loans (VSL) groups to build a stronger financial base for investment and to act as a buffer against short-term needs and for small, individual shocks; Credit activities promoted through microfinance to support larger investment into farmers’ livelihoods for prudent risk taking. The planning and design phase of R4 in Malawi was initiated in August 2014 and finalized in early 2015. This phase focused on setting up and consolidating the program team, R4 component design, establishing partnerships and planning for implementation. During this phase, a work plan and implementation timeline for the risk transfer component was developed, including the design of the weather-based index insurance prototype and final product. The initiative was piloted in the second quarter of 2015, during which the four components were implemented with a total of 500 farmers registering for insurance. The index was refined throughout 2015 and has been continuously assessed through a robust monitoring system. A basis risk plan – to mitigate the mismatch of the index-triggered payouts and actual losses experienced by farmers or communities- was developed in addition to the development of a system for monitoring claims settlement procedures. In 2016, R4 in Malawi explored potential linkages with other WFP programmes such as the Global Framework for Climate Service (GFCS) and Purchase for Progress (P4P) as part of its scaling up efforts. As a result, climate services were integrated into the initiative, with smallholder farmers receiving tailored weather and climate information to help them make better-informed crop decisions in the context of more variable rainfall and temperatures.
Starting in 2016, R4 conducted seasonal monitoring exercises to assess the growing seasons. These studies have included field-level data collection on rainfall, crop production and farming practices undertaken by R4 households to confirm the index outputs and its accuracy. From 2015 to 2018, the initiative scaled up from 500 farmers to 10,327 farmers. In the 2018-19 season, the initiative has enrolled over 39,000 farmers.
A systematic M&E process was put in place to measure the effects of the initiative on the food and income security of participating households, based on a sequential set of assessments to understand how the delivery of outputs progressively contributes to the expected outcomes of the intervention, informing the design of the intervention accordingly. This sequence includes tracking of households’ participation in different components over time, Beneficiary Contact Monitoring carried out shortly after the delivery of insurance payouts, and systematic collection of household level data to record changes at different points in the implementation cycle.
The success of the initiative is evident in the results. In Ethiopia, insured households saved two times more than uninsured households in the same period, while also increasing animal ownership by four more animals on average. In Senegal, crop production doubled for R4 participants, while increases to the Food Consumption Score was four times higher than the increase for non-participant households during the same period. In Kenya, area-yield index insurance payouts helped farmers to access food during the lean season. One month after a payout to 963 farmers, a survey of 124 recipients found that 85% of households bought food, 39% bought livestock, 29% bought agricultural inputs and 31% used the funds to pay school fees. The payout helped mitigate against food insecurity after a failed agricultural season and reduced the erosion of livelihoods through the purchase of productive assets.
Insurance can also play a long-term transformative role that helps to lift people out of poverty. As one R4 participant in Malawi said, “This year, I engaged in farming with a very positive mind knowing that if my crops failed because of drought, I would be supported by insurance compensation and not be desperate to find food.” By reducing uncertainty, insurance encourages farmers to invest in planting crops in more fields, or purchasing inputs such as fertilisers, seeds or new agricultural technologies that can increase their productivity in non-payout years. Farmers are also supported in building up savings, taking calculated risks to diversify their livelihoods and accessing microcredit. This in turn helps to address the country’s structural challenges such as poor access to inputs, assets and financial services.
In Malawi, the program monitored the food security situation using WFP’s corporate indicators: food consumption score, reduced coping strategy index, livelihood coping strategy index and food expenditure share. For all the indicators measured, R4 participants showed a higher improvement in their food security status than non-participant households, showing that R4 has a potential effect on improving food security. The insurance offered through R4 increases and protects the productive assets, savings and animals owned of participants, which decreases the amount of expenditure households dedicate to food consumption and increases diet diversity.
R4 participants in Malawi also showed an improvement in the resilience capacity index (RCI) developed by the Food Security Information Network compared to the control group over the 2015 - 2017 period. Indicating that the R4 program had a positive effect on household resilience to food insecurity. This reflects the improvement of productive assets and capacities to face shocks and corroborates the assumption that R4 protects agricultural assets and promotes investments, which by improving agricultural productivity contribute to increasing the resilience capacity of households in the project areas.
Implementing a microinsurance scheme takes time and requires careful planning before launching the product. In many countries, there is limited to no local capacity to design index insurance products. Therefore, there is a fundamental need for WFP to engage with international partners to design the index as well as build local capacity, over a multi-year period. Moreover, designing a microinsurance product requires a lot of data mining, that includes rainfall, satellite, agricultural production, as well as testing before a final product can be distributed. Additional complexity results from WFP working with farmers with low productivity and irregular farming practices. As the index is only a proxy for capturing the worst shocks experienced by farmers and communities, the more variation in farming practices, the more difficult the design of an effective index becomes.
Educating R4 participants on how the products function is fundamental, particularly on how the index is developed. Farmers find it difficult to understand why insurance payouts are not disbursed in the case of a low yield, which could be the result of poor farming practices, limited access to credit or low-quality seeds.
In order to develop local skills and knowledge on weather index-based or area yield insurance, WFP has started training and capacity building activities in Senegal and Malawi. This process is taking two to three years, with institutional commitment being central to its success. Distributing insurance to thousands of small and isolated farmers is certainly one of the biggest constraints to scaling up. There are usually only a small number of aggregators able to reach large numbers of people, which forces insurance companies to produce several contracts. The most common delivery channels are MFIs, financial institutions, cooperatives and farmers organisations, as well as mobile phone companies and agro-dealers. In order to be successful, a distribution system needs to have dedicated staff and a strong commitment from the organization. Digital innovation is opening new opportunities, such as distributing insurance payouts through mobile money channels, which is currently being explored by WFP.
To date, WFP has been working with MFIs, farmers’ clubs and cooperatives, Village Saving and Loans associations (VSL), and NGOs to distribute and raise awareness on insurance products. Delivery channels that have the technological and operational capacity to report sales, coordinate premium collection, settle claims and aggregate farmers are preferred, although there is no ideal option and choice is very much context based. In the long run, the business interest and an effective partnership with an insurance company are essential.
R4 aligns with WFP’s corporate Three-Pronged Approach to Resilience Building (3PA) to support country—led efforts, government ownership and institutional capacity development. 3PA is comprised of three collaborative tools at the national, regional and local level to support actions from the bottom-up. This allows for a basket of services for communities and households to select from during consultation and programme design.
WFP’s strategy for sustainability and phase out is two-pronged. Firstly, it aims to facilitate the ability of farmers to pay for services, through supporting productive investment and achieving greater financial and market inclusion, as well as making insurance more commercially viable through promoting the development of products adapted to high-income farmers. The objective is to facilitate a progressive and smooth transition from heavily subsidized to purely commercial services.
To ensure long-term economic sustainability, R4 contributes to the creation of rural financial markets, by building local capacity and gradually transitioning farmers to pay for insurance in cash. Together these interventions equip smallholder farmers with a comprehensive integrated climate risk management package including tools and services to face climate variability and help achieve food and nutrition security. For those farmers who will not have the ability to access commercial services in the foreseeable future, WFP aims to integrate microinsurance in governments’ social protection systems, whereby the government begins subsidizing insurance for the established target groups, premium level and duration of transfers. These combined efforts increase the natural and productive capital of food insecure communities while also strengthening human, social and financial capital. In terms of environmental sustainability, WFP recognizes that care for the environment is essential to achieving food security and sustainable development as outlined in the Sustainable Development Goals. WFP’s Environmental Policy commits WFP to systematically identify, avoid and manage risks to the environment from any of WFP’s food assistance activities, and pursue environmental benefits as it seeks to avoid harm. WFP is planning to expand integrated climate risk management approaches, such as R4, to new geographic areas in current countries as well as implementing in new countries where smallholder famers are increasingly vulnerable to climate variability and extremes, such as Mozambique and Burkina Faso. Globally, R4 currently provides 93,000 smallholder farmers with access to microinsurance and integrated climate risk management, with the aim to reach over 500,000 participants by 2022.
The major risk that microinsurance provides protection to is drought, which directly affects food systems, and is at the center of WFP’s efforts to achieve Zero Hunger. WFP has been the first UN agency to develop a microinsurance scheme integrated in a broader strategy to manage climate risks. Since 2006, WFP has worked with its partners to test and scale up innovative ways of providing insurance protection to help people become more resilient and food secure. Microinsurance can help to achieve zero hunger when used alongside other tools that reinforce each other in an integrated approach to help manage risks. WFP is also exploring integration with market access support, which would provide further incentives for agricultural production, ensure the sustainability of investments and allow farmers to become more competitive in the commercial market. In chronically and transient food insecure areas prone to recurrent droughts and floods, an integrated approach to managing climate risk offers a viable way to foster and protect sustainable improvements in livelihoods. In this context, WFP promotes microinsurance to smallholder farmers who are vulnerable to climate risk and face high levels of food insecurity. Insurance is only one part of an integrated portfolio of solutions, which is best suited to address specific risks from lower frequency / higher impact shocks. This portfolio of solutions contributes to the achievement of the 2030 Agenda by driving progress towards several Sustainable Development Goals through its transformative and integrated approach. By providing protection for vulnerable farmers’ livelihoods, R4 supports the achievement of SDG 1, eradication of poverty, as well as achieving WFP’s mandate of achieving SDG 2, zero hunger. Integrated climate risk management is also critical for achieving SDG 13, taking urgent action to combat climate change and its impacts. The R4 initiative aligns with the WFP’s Strategic Plan to prioritize SDG 17, revitalizing global partnerships between governments, the private sector and civil society.
“Using insurance to protect farmers against drought in Senegal” 2018: https://docs.wfp.org/api/documents/WFP-0000073529/download/?_ga=2.85843…
InsuResilience Global Partnership Newsletter: https://www.insuresilience.org/climate-risk-insurance-mechanisms-and-so…
African smallholder farmers get insurance payouts of US$ 1.5 million after low rainfall, R4 News Release, May 2018: https://www.wfp.org/news/news-release/african-smallholder-farmers-get-i…
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Michael Goode, Programme and Communication Consultant