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Making the risky business of agriculture ‘climate-smart’

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Farmers harvest crops in Madagascar.

Agriculture is an inherently risky business.  From natural disasters and erratic rainfall to pests, few other sectors are as exposed or as vulnerable to shocks.
Climate change is a source of significant risks for agricultural and food systems: Climate projections suggest that average growing conditions will shift and there will be more uncertainty in predicting climate and weather conditions. More concretely, these impacts will translate into an overall warming trend, an increasingly erratic distribution of precipitation, more frequent and more devastating extreme weather events, and spatial shifts in the occurrence of pests and diseases. These impacts can cause production losses which lead to market volatility and in some cases, reactionary shifts in policies and regulations. 

Climate change is not a distant reality. It is happening now, and its impacts are already being felt in fields and markets around the world. Research shows that many agricultural regions have already experienced declines in crop and livestock production due to climate change-induced stress. Climate disruptions to agricultural production have increased over the past 40 years and are projected to increase further over the next 25 years (Hatfield et al. 2014).  While climate change is expected to produce both winners and losers overall, losses will far outweigh the gains, and the poor will be disproportionally affected because of their dependence on agriculture and a lower capacity to adapt.
Agricultural risk management (ARM) is ideally placed to support stakeholders in building resilience to these increased risks in the short and medium term. Agricultural risk management frameworks and approaches can point the way towards optimal risk mitigation, transfer, and coping strategies—and help identify appropriate actions for strengthening resilience and climate change adaptation.
Agricultural risk management can also play an important role in the transition to a climate-smart agriculture system by offering a useful entry point for dialogue. By assessing risks and their economic impacts, agricultural risk management practitioners can demonstrate the business case for investing in preventative, risk mitigation measures that reduce losses in the short term. These same investments can help enhance productivity, adapt livelihood systems to changing climatic conditions, and contribute to reducing emissions. Quantifying losses can also create a sense of urgency that paves the way for broader efforts to operationalize climate-smart agriculture and integrate climate resilience in to national strategies and policies.
Outcomes from risk assessments have facilitated public policy action and investments in a growing number of countries. Risk assessment findings informed the preparation of the Bank’s $111 million Niger Climate Smart Agriculture Support Project and the Government of Kenya’s 2015-2030 program on Climate Smart Agriculture--both of which aim to expand climate smart agriculture in those countries. Risk management also proved to be a useful starting point for a dialogue on resilient supply chains with private sector partners in London in October.
We urgently need policies and programs that address agriculture’s vulnerability to climate change. Leveraging the success of agricultural risk management to build resilience is an opportunity not to be missed. Our new publication, Agricultural Risk Management in the Face of Climate Change will help practitioners make the most of that opportunity.  It provides a framework for evaluating risks and impacts under a changing climate and for action to enable long-term adaptation planning. The publication, which launched at a forum that brought together 180 stakeholders from agriculture and agribusiness, could play a role in tackling the shared challenge of climate change and facilitating adaptation in both the public and private sectors. It’s especially timely, since bottom-line implications for governments, multinational corporations and small-scale producers alike have created a high demand for strategies to increase supply chain resilience in the face of climate change.
You can download the publication here: Agricultural Risk Management in the Face of Climate Change

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