Bolivia: Fondo de Mitigación del Riesgo Agrícola (FMRA)

Fundación PROFIN has developed an innovative index-based insurance scheme that has been piloted in four provinces in the North and Central Altiplano regions of Bolivia. The scheme combines incentives for pro-active risk reduction and a flexible, people-centered index mechanism. In this scheme the trigger is based on the production levels of reference plots of farmland in areas which are geographically similar in terms of temperature, precipitation, humidity, and type of soil.

The reference plots are farmed by farmers who have been identified as good practitioners by their peers. The yields on their plots serve as an indicator of whether production levels have been adversely affected by environmental factors, thus triggering an insurance payout, or by other factors within a farmer’s control. Moral hazard in the scheme – if the reference farmers were to intentionally underperform – is limited by the reputational risks to the farmers in their own communities. The reference farmers also serve as technical assistance agents to promote ideas for increasing yields and reducing disaster impacts.

The system encourages other farmers to match the reference farmers in implementing mitigation efforts to reduce the effects of drought, excess rains, hailstorms and frost, because those farmers run the risk that their own plots will be significantly affected while the reference farmers’ plots will be less affected.
 

Fundación PROFIN
http://www.fundacion-profin.org/fmra.html

Are you sure you want to delete this "resource"?
This item will be deleted immediately. You cannot undo this action.

Related Resources

Guidance material
20 Oct 2013
The paper focuses on financing and institutional arrangements for dzud. It seeks to encourage a more coordinated, predictable, timely and targeted approach to dzud on the part of both the Government of Mongolia (GoM) and its development partners, bas...
Tags: Guidance material, Cold wave / dzud, Livelihoods, Risk Transfer
27 Aug 2013
“As part of its disaster risk management efforts, the Federal Government of Mexico established the Fund for Natural Disasters FONDEN to support disaster relief and reconstruction. FONDEN was originally established as a budgetary tool through wh...
Tags: Risk Transfer
Research
13 Jan 2017
The World Risk Report 2016 analyses the role that infrastructure plays in shaping a country’s disaster risk. The World Risk Index, calculated by the University of Stuttgart, is an integral part of the report as it ranks 171 countries according to ...
Tags: Research, Risk Assessment, Risk Transfer