Financial Instruments Sector Team
The Financial Instruments Sector Team helps people overcome climate risk through financial tools like index insurance and index-based disaster risk management. Through our partners, collaborators, and educational activities, we are engaging the players necessary to represent the wide array of expertise and perspectives and build community driven solutions.
IRI projects have broken boundaries in bringing insurance to populations believed to be unreachable, due to poverty or technical issues, leading to extremely popular products with demonstrated impacts and overwhelming demand, often scaling by an order of magnitude each year. We have worked in over a dozen countries on hundreds of index contracts with many tens of thousands of policies purchased by farmers. For many years, we have partnered in exploring the potential for using index insurance in developing countries to assist emerging markets, increase the productivity of smallholder farmers, and reduce the threats from climate risk. Through our work on index insurance for climate adaptation and poverty reduction, we have unlocked many of the key constraints for index insurance to be able to meaningfully address poverty at large scales, overcoming what have previously been considered impossible hurdles in technology, information, poverty levels, and farmer involvement using a strong science base, cooperative design and validation, and strategic integration into adaptation and development packages.
Financial Instruments Sector Team also supports disaster risk management strategies through index-based tools. Building upon successful work we have done in West Africa on floods and in the Caribbean on hurricanes (with groups such as the Red Cross), decision-makers develop climate/forecast/weather thresholds for action using their current options. Using the thresholds we map climate change information into reduction actions and use revealed choice techniques to recover decision-makers’ implicit valuations of climate risk/information.
Research contributions include work on the use of probabilistic information in decision-making, the valuation of environmental features, the use of remote sensing proxies in quantifying environmental amenities and environmental risk, the value of information in negotiation and markets, how uncertainty, risk, and information impacts negotiations between players, and work specific to index insurance, climate information, adaptation, and economic development.
We have been involved in global policy processes such as the COP and GHF meetings and our work has received attention in popular press outlets such as the Guardian, Nature, the New York Times, and Reuters.