Innovations in Climate Risk Management: Protecting and Building Rural Livelihoods in a Variable and Changing Climate

We argue that more effective management of climate risk must be part of the response of the international agriculture community to the double crisis of persistent poverty and a changing climate. The most promising opportunities to adapt to climate change involve action on shorter time scales that also contributes to immediate development challenges. Climate risk management (CRM) combines systematic use of climate information, and technology that reduces vulnerability and policy that transfers risk. The cost of climate risk comes both through damaging extreme events and through forfeited opportunity in climatically-favorable years. Effective CRM therefore involves managing the full range of variability, balancing hazard management with efforts to capitalize on opportunity. We discuss several innovations for managing climate risk in agriculture, which have not yet been fully mainstreamed in international agricultural research-for-development. First, effective rural climate information services enable farmers to adopt technology, intensify production, and invest in more profitable livelihoods when conditions are favorable; and to protect families and farms against the long-term consequences of adverse extremes. Second, information and decision support systems synthesize historic, monitored and forecast climate information into forms that are directly relevant to institutional decisions (planning, trade, food crisis response) that impact farmer livelihoods. Third, innovations in index-based insurance and credit overcome some of the limitations of traditional insurance, and are being applied to pre-financing food crisis response, and to removing credit constraints to adopting improved technology. We present a typology of CRM interventions around the concept of dynamic poverty traps.