Integrated Climate Risk Financing: ILO and UNDP teaming up in the Philippines
15 August 2012
In Angusan Del Norte, North Eastern Mindanao, Philippines, farmers have been losing income and assets because of increasingly unpredictable and extreme weather events, such as droughts, monsoons, typhoons and floods. In some cases the combined effects could result in a 60% loss of a crop. This is difficult to cope with and unsustainable for communities that are relatively isolated from the formal economy and remain entirely dependent on the fruits of their labour in the fields.
About three quarters of the rural poor in the Philippines live in the South, in Mindanao and in the Vasayas. These are already low income households due to geographical isolation, poor access to services and few opportunities to innovate. As weather continues to be unpredictable and extreme, farmers become increasingly vulnerable to these risks thus pushing communities deeper into poverty. To better manage these risks and allow their hard work to gradually translate into higher income and surplus at the end of the growing season, what is needed is a better way to manage the risks.
Through a joint climate change adaptation programme with support from the Millennium Development Goals (MDG) Achievement Fund, the International Labour Organization (ILO) has been working with local governments and the banking sector to help to make poverty a thing of the past in this corner of the world. It all comes down to three words: Integrated Financial Package (IFP). Not catchy or glamorous sounding maybe, but that probably isn’t a big issue if you are living on the edge in Mindanao.
The IFP approach centres on the idea that farmers need something more than just credit, just technology, just knowledge or just insurance – they need it all and it must be easily understandable and accessible. After three years the results are more than promising. Farmers are getting rapid insurance pay-outs following droughts or torrential rainfall event. The rate and amount of household savings have increased. Interest payments for agricultural inputs have reduced.
Currently, this approach is being scaled up with support from UNDP and financing from the UNFCCC’s Special Climate Change Fund (SCCF), managed by the Global Environment Facility (GEF). The objective is to reduce poverty by increasing farmer resilience to climate risks. The initiative ‘Scaling up Risk Transfer Mechanism for Climate Vulnerable Farming Communities in Southern Philippines’ will leverage USD 10 million from central government agencies, local government units, training service providers, financial service providers, non-governmental organizations, and farmers’ associations. It will help the North East of Mindanao consolidate early gains made in strengthening the adaptive capacity of vulnerable farming communities. Ultimately it will enable communities themselves to turn farming in this area from a ‘poverty trap’ into a pathway out of poverty.
Article written by Angus Mackay, UNDP Asia Pacific Regional Centre, [email protected]
First published in UNDP Climate Change Adaptation Bulletin, Issue No. 9, June 2012
About three quarters of the rural poor in the Philippines live in the South, in Mindanao and in the Vasayas. These are already low income households due to geographical isolation, poor access to services and few opportunities to innovate. As weather continues to be unpredictable and extreme, farmers become increasingly vulnerable to these risks thus pushing communities deeper into poverty. To better manage these risks and allow their hard work to gradually translate into higher income and surplus at the end of the growing season, what is needed is a better way to manage the risks.
Through a joint climate change adaptation programme with support from the Millennium Development Goals (MDG) Achievement Fund, the International Labour Organization (ILO) has been working with local governments and the banking sector to help to make poverty a thing of the past in this corner of the world. It all comes down to three words: Integrated Financial Package (IFP). Not catchy or glamorous sounding maybe, but that probably isn’t a big issue if you are living on the edge in Mindanao.
The IFP approach centres on the idea that farmers need something more than just credit, just technology, just knowledge or just insurance – they need it all and it must be easily understandable and accessible. After three years the results are more than promising. Farmers are getting rapid insurance pay-outs following droughts or torrential rainfall event. The rate and amount of household savings have increased. Interest payments for agricultural inputs have reduced.
Currently, this approach is being scaled up with support from UNDP and financing from the UNFCCC’s Special Climate Change Fund (SCCF), managed by the Global Environment Facility (GEF). The objective is to reduce poverty by increasing farmer resilience to climate risks. The initiative ‘Scaling up Risk Transfer Mechanism for Climate Vulnerable Farming Communities in Southern Philippines’ will leverage USD 10 million from central government agencies, local government units, training service providers, financial service providers, non-governmental organizations, and farmers’ associations. It will help the North East of Mindanao consolidate early gains made in strengthening the adaptive capacity of vulnerable farming communities. Ultimately it will enable communities themselves to turn farming in this area from a ‘poverty trap’ into a pathway out of poverty.
Article written by Angus Mackay, UNDP Asia Pacific Regional Centre, [email protected]
First published in UNDP Climate Change Adaptation Bulletin, Issue No. 9, June 2012