Maladaptive outcomes of climate insurance in agriculture

• Published in: Global environmental change Vol. 46; pp. 23 - 33
• Main Authors: Müller, Birgit, Johnson, Leigh, Kreuer, David
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier Ltd 01.09.2017; Elsevier Science Ltd
• Subjects: Agricultural development; Agricultural economics; Agricultural production; Agriculture; Agroecology; Agronomy; Ambiguity; Climate; Climate change; Climate change adaptation; Climate effects; Coping strategies; Developed countries; Developing countries; Donors; Ecological effects; Ecological risk assessment; Environmental impact; Environmental risk; Index insurance; Insurance; Land use; LDCs; Resilience; Side effects; Smallholder agriculture; Social-ecological systems; Vulnerability; Vulnerability; Index insurance; Climate change adaptation; Agroecology; Resilience; Smallholder agriculture
• ISSN: 0959-3780; 1872-9495
• DOI: 10.1016/j.gloenvcha.2017.06.010

•Agricultural insurance is praised as a promising tool in the face of climate risk.•Studies on social and ecological consequences have produced inconclusive results.•We offer a systematic overview of potential effects of ‘climate insurance’.•Insurance may generate serious economic, social, and ecological consequences.•We suggest principles and recommendations for avoiding maladaptive outcomes. Agricultural insurance programs are currently being championed by international donors in many developing countries. They are acclaimed as promising instruments for coping with climate risk. However, research on their impacts has mainly focused on economic considerations. Studies on broader social and ecological consequences are sparse and have produced ambiguous and inconclusive results. We address this knowledge deficit by (a) advocating for a holistic view of social-ecological systems and vulnerability when considering insurance impacts; (b) offering a systematic overview highlighting the potential beneficial and adverse effects of ‘climate insurance’ in agriculture, particularly where programs target intensifying agricultural production; and (c) suggesting preliminary principles for avoiding maladaptive outcomes, including specific recommendations for designing appropriate impact studies and insurance programs. Our synopsis brings together scientific knowledge generated in both developing and developed countries, demonstrating that agricultural insurance programs shape land-use decisions and may generate serious economic, social, and ecological consequences. If insurance is to be an appropriate tool for mitigating the impacts of climate change, it needs to be carefully developed with specific local social-ecological contexts and existing risk coping strategies in mind. Otherwise, it is liable to create long-term maladaptive outcomes and undermine the ability of these systems to reduce vulnerability.