Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks?
Poor households in rural areas are particularly vulnerable to risks that reduce incomes and increase expenditures. Most past research has focused on risk-coping strategies for the rural poor, specially on micro-level and household actions. These ar...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2002/03/1751124/can-financial-markets-tapped-help-poor-people-cope-weather-risks http://hdl.handle.net/10986/14816 |
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okr-10986-14816 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADVERSE SELECTION AGRICULTURAL INSURANCE AGRICULTURAL OUTPUT AGRICULTURAL PRODUCTION APPLICATIONS BANKS CAPITAL MARKETS CATASTROPHES CATASTROPHIC INSURANCE COMMODITIES COVERAGE CROP INSURANCE DEBT DISASTER AID DISASTER ASSISTANCE DISASTER RELIEF DISASTERS DROUGHTS EARTHQUAKE INSURANCE EARTHQUAKES ECONOMIC ACTIVITY ECONOMIC INCENTIVES ECONOMICS ECONOMISTS EMPLOYMENT ENTREPRENEURS EXPENDITURES FARMERS FARMS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SERVICES FLOODING FLOODS FOREIGN AFFAIRS GAMBLING GOVERNMENT INTERVENTION HUMAN DEVELOPMENT HURRICANES INCOME INCOME RISKS INDEMNITY INSPECTIONS INSURANCE INSURANCE INSURANCE CONTRACTS INSURANCE FUNDS INSURANCE MARKETS INSURANCE PRODUCTS INSURED EVENTS INTEREST RATES INVESTIGATIONS LIVESTOCK PRODUCTS LOW INCOME MORAL HAZARD NATURAL DISASTERS NUTRITION PERVERSE INCENTIVES POLICY RESEARCH POOR FARMERS PREMIUMS PRICE RISK PRIVATE INSURANCE PRIVATE SECTOR PRODUCERS PRODUCTIVITY PUBLIC POLICY REINSURANCE REINSURANCE MARKETS REINSURERS RELIEF RISK RISK AVERSION RISK EXPOSURE RISK MANAGEMENT RISK MITIGATION RISK REDUCTION RISK SHARING RURAL COMMUNITIES SALES OF ASSETS SAVINGS SOCIAL CAPITAL SUSTAINABILITY SYSTEMIC RISK TRANSACTION COSTS UNDERWRITING VOLCANIC ERUPTIONS WELFARE GAINS NATURAL DISASTERS WEATHER DISASTERS RISK SHARING POOR FAMILIES PRODUCERS ASSOCIATIONS INSURANCE RURAL POVERTY COVARIATE RISKS RURAL POVERTY |
| spellingShingle |
ADVERSE SELECTION AGRICULTURAL INSURANCE AGRICULTURAL OUTPUT AGRICULTURAL PRODUCTION APPLICATIONS BANKS CAPITAL MARKETS CATASTROPHES CATASTROPHIC INSURANCE COMMODITIES COVERAGE CROP INSURANCE DEBT DISASTER AID DISASTER ASSISTANCE DISASTER RELIEF DISASTERS DROUGHTS EARTHQUAKE INSURANCE EARTHQUAKES ECONOMIC ACTIVITY ECONOMIC INCENTIVES ECONOMICS ECONOMISTS EMPLOYMENT ENTREPRENEURS EXPENDITURES FARMERS FARMS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SERVICES FLOODING FLOODS FOREIGN AFFAIRS GAMBLING GOVERNMENT INTERVENTION HUMAN DEVELOPMENT HURRICANES INCOME INCOME RISKS INDEMNITY INSPECTIONS INSURANCE INSURANCE INSURANCE CONTRACTS INSURANCE FUNDS INSURANCE MARKETS INSURANCE PRODUCTS INSURED EVENTS INTEREST RATES INVESTIGATIONS LIVESTOCK PRODUCTS LOW INCOME MORAL HAZARD NATURAL DISASTERS NUTRITION PERVERSE INCENTIVES POLICY RESEARCH POOR FARMERS PREMIUMS PRICE RISK PRIVATE INSURANCE PRIVATE SECTOR PRODUCERS PRODUCTIVITY PUBLIC POLICY REINSURANCE REINSURANCE MARKETS REINSURERS RELIEF RISK RISK AVERSION RISK EXPOSURE RISK MANAGEMENT RISK MITIGATION RISK REDUCTION RISK SHARING RURAL COMMUNITIES SALES OF ASSETS SAVINGS SOCIAL CAPITAL SUSTAINABILITY SYSTEMIC RISK TRANSACTION COSTS UNDERWRITING VOLCANIC ERUPTIONS WELFARE GAINS NATURAL DISASTERS WEATHER DISASTERS RISK SHARING POOR FAMILIES PRODUCERS ASSOCIATIONS INSURANCE RURAL POVERTY COVARIATE RISKS RURAL POVERTY Skees, Jerry Varangis, Panos Larson, Donald Siegel, Paul Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks? |
| geographic_facet |
Latin America & Caribbean Mexico |
| relation |
Policy Research Working Paper;No.2812 |
| description |
Poor households in rural areas are
particularly vulnerable to risks that reduce incomes and
increase expenditures. Most past research has focused on
risk-coping strategies for the rural poor, specially on
micro-level and household actions. These are risks that can
been shared within a community or extended family. These
strategies are effective for independent risks, but
ineffective for covariate or systemic risks. The authors
focus on private and public mechanisms for managing
covariate risk for natural disasters. When many households
within the same community face risks that create losses for
all, traditional coping mechanisms are likely to fail. Such
covariate risks are not uncommon in many developing
countries, especially where farming remains a major source
of income. The authors focus on risks related to weather
events (such as excess rain, droughts, freezes, and high
winds) that have a severe impact on rural incomes. Weather
insurance could cover the covariate risk for a community of
poor households through formal and informal risk-sharing
arrangements among households that are purchasing these
weather contracts. Given recent Mexican innovations targeted
at helping the poor cope with catastrophe weather events,
the authors use Mexico as a case study. In Mexico, poor
households are exposed to systemic risks, such as droughts
and floods, that affect the economic livelihood of their
region. Catastrophic insurance is useful for small farmers,
although commercially oriented small farmers may wish to
obtain coverage for less catastrophic events. Weather
insurance could meet this need. It pays out according to the
frequency and intensity of specific weather events. Because
weather insurance depends on the occurrences and objective
measure of intensity of a specific event, it does not
require individual farm inspection that can be very costly
for small farm. The authors argue that a key issue of
delivering insurance to small farmers is the existence of
producer organizations. In Mexico, the farmer mutual
insurance funds provide a good example. These funds provide
insurance to their members by pulling together resources to
pay for future indemnities and reinsures itself from major
systemic risks that could hurt simultaneously all their members. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Skees, Jerry Varangis, Panos Larson, Donald Siegel, Paul |
| author_facet |
Skees, Jerry Varangis, Panos Larson, Donald Siegel, Paul |
| author_sort |
Skees, Jerry |
| title |
Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks? |
| title_short |
Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks? |
| title_full |
Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks? |
| title_fullStr |
Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks? |
| title_full_unstemmed |
Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks? |
| title_sort |
can financial markets be tapped to help poor people cope with weather risks? |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2002/03/1751124/can-financial-markets-tapped-help-poor-people-cope-weather-risks http://hdl.handle.net/10986/14816 |
| _version_ |
1764429838923333632 |
| spelling |
okr-10986-148162021-04-23T14:03:20Z Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks? Skees, Jerry Varangis, Panos Larson, Donald Siegel, Paul ADVERSE SELECTION AGRICULTURAL INSURANCE AGRICULTURAL OUTPUT AGRICULTURAL PRODUCTION APPLICATIONS BANKS CAPITAL MARKETS CATASTROPHES CATASTROPHIC INSURANCE COMMODITIES COVERAGE CROP INSURANCE DEBT DISASTER AID DISASTER ASSISTANCE DISASTER RELIEF DISASTERS DROUGHTS EARTHQUAKE INSURANCE EARTHQUAKES ECONOMIC ACTIVITY ECONOMIC INCENTIVES ECONOMICS ECONOMISTS EMPLOYMENT ENTREPRENEURS EXPENDITURES FARMERS FARMS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SERVICES FLOODING FLOODS FOREIGN AFFAIRS GAMBLING GOVERNMENT INTERVENTION HUMAN DEVELOPMENT HURRICANES INCOME INCOME RISKS INDEMNITY INSPECTIONS INSURANCE INSURANCE INSURANCE CONTRACTS INSURANCE FUNDS INSURANCE MARKETS INSURANCE PRODUCTS INSURED EVENTS INTEREST RATES INVESTIGATIONS LIVESTOCK PRODUCTS LOW INCOME MORAL HAZARD NATURAL DISASTERS NUTRITION PERVERSE INCENTIVES POLICY RESEARCH POOR FARMERS PREMIUMS PRICE RISK PRIVATE INSURANCE PRIVATE SECTOR PRODUCERS PRODUCTIVITY PUBLIC POLICY REINSURANCE REINSURANCE MARKETS REINSURERS RELIEF RISK RISK AVERSION RISK EXPOSURE RISK MANAGEMENT RISK MITIGATION RISK REDUCTION RISK SHARING RURAL COMMUNITIES SALES OF ASSETS SAVINGS SOCIAL CAPITAL SUSTAINABILITY SYSTEMIC RISK TRANSACTION COSTS UNDERWRITING VOLCANIC ERUPTIONS WELFARE GAINS NATURAL DISASTERS WEATHER DISASTERS RISK SHARING POOR FAMILIES PRODUCERS ASSOCIATIONS INSURANCE RURAL POVERTY COVARIATE RISKS RURAL POVERTY Poor households in rural areas are particularly vulnerable to risks that reduce incomes and increase expenditures. Most past research has focused on risk-coping strategies for the rural poor, specially on micro-level and household actions. These are risks that can been shared within a community or extended family. These strategies are effective for independent risks, but ineffective for covariate or systemic risks. The authors focus on private and public mechanisms for managing covariate risk for natural disasters. When many households within the same community face risks that create losses for all, traditional coping mechanisms are likely to fail. Such covariate risks are not uncommon in many developing countries, especially where farming remains a major source of income. The authors focus on risks related to weather events (such as excess rain, droughts, freezes, and high winds) that have a severe impact on rural incomes. Weather insurance could cover the covariate risk for a community of poor households through formal and informal risk-sharing arrangements among households that are purchasing these weather contracts. Given recent Mexican innovations targeted at helping the poor cope with catastrophe weather events, the authors use Mexico as a case study. In Mexico, poor households are exposed to systemic risks, such as droughts and floods, that affect the economic livelihood of their region. Catastrophic insurance is useful for small farmers, although commercially oriented small farmers may wish to obtain coverage for less catastrophic events. Weather insurance could meet this need. It pays out according to the frequency and intensity of specific weather events. Because weather insurance depends on the occurrences and objective measure of intensity of a specific event, it does not require individual farm inspection that can be very costly for small farm. The authors argue that a key issue of delivering insurance to small farmers is the existence of producer organizations. In Mexico, the farmer mutual insurance funds provide a good example. These funds provide insurance to their members by pulling together resources to pay for future indemnities and reinsures itself from major systemic risks that could hurt simultaneously all their members. 2013-08-06T15:36:03Z 2013-08-06T15:36:03Z 2002-03 http://documents.worldbank.org/curated/en/2002/03/1751124/can-financial-markets-tapped-help-poor-people-cope-weather-risks http://hdl.handle.net/10986/14816 English en_US Policy Research Working Paper;No.2812 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Mexico |