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Innovations in risk transfer for natural disas-ters in lower-income countries, in particular weather index insurance products, can be used to shift various weather-related risks. This arti-cle discusses the linkage between weather risk and poverty; provides background informa-tion on weather index insurance products; de-scribes requirements for the implementation of weather index insurance and possible roles for governments, donors, and international financial institutions in facilitating implemen-tation; and briefly reviews recent efforts to provide weather index insurance products in rural areas of some middle- and lower-income countries. Weather Risk and Poverty Approximately 1 billion people live on less than 1 per day. Three-quarters of those live in rural areas (Chen and Ravallion 2007), and over one-half depend on agriculture or agricul-tural labor as their primary source of livelihood (International Fund for Agricultural Develop-ment 2001). Thus, poor rural households are particularly susceptible to the financial conse-quences of weather-related natural disasters.
Barnett et al. (Sat,) studied this question.