Introducing a Micro-Flood Insurance Market in Bangladesh: Institutional Design and Commercial ViabilityPosted on: 2 June 2011 - 10:31am
The main objectives of this paper are to design and test the commercial viability of the introduction of different flood insurance schemes in Bangladesh, one of the poorest and most flood struck developing countries in the world. The study presented here takes place in the context of both low supply due to the inherent risky nature of high expected losses caused by flooding and low insurance demand due to lack of financial income resources of large parts of the floodplain populations. In this paper we compare the expected compensation payment by potential insurers with the expected premium for different flood insurance schemes under two different institutional- analytical models: a partner-agent and full service model of micro-insurance. We find that although demand and willingness to pay (WTP) for flood insurance are low in flood risk areas in Bangladesh, commercially viable markets exist for house property and unemployment insurance. However, administrative implementation costs of micro-insurance play a significant role in determining the viability as well as the long-term sustainability of micro flood insurance schemes. The policy implication of the work presented here is that partner-agent models of microinsurance organization are a precondition for the long-term sustainability of a micro flood insurance market. We conclude that a full service based organizational structure is only viable in places where flood probability is considerably low.
The aims of the study presented in this paper are to assess the demand for and test the commercial viability of a crop insurance scheme in different natural disaster-prone areas in Bangladesh, as an alternative poverty alleviation and natural disaster mitigation strategy. In a large scale household survey carried out at the end of 2006, 3600 riverine and coastal floodplain residents in Bangladesh were asked for their preferences for crop insurance schemes using the double bounded contingent valuation (CV) method. For example, asking them for their willingness to pay (WTP) for crop insurance schemes to eliminate future catastrophe risks. We find crop insurance demand to be positively correlated with household head’s primary occupation, land ownership and size of agricultural farm land. Our study further reveals that crop damage cost and households’ willingness to pay to reduce damage vary significantly across the nature of the disaster risk. Using the data collected through household survey, we tested our simple analytical model of commercial viability of a crop insurance scheme by comparing the future value of expected premium receivable by insurer, with the expected indemnity payable to the insured. Assuming zero administrative cost and 10% interest rate per annum, we find crop insurance schemes are marginally viable in riverine flood plain areas (both embanked and unembanked). The difference between the average expected indemnity payment and the future value of expected insurance premium is way too high for the nature of risk and amount of damage cost faced by households living in haor basin and coastal floodplain areas.
Environment and poverty nexus is still a polemical issue. Some schools of thought claim that poverty has the major effect on the environment, while another school of thought suggests that the environment has more impact on the poor than vice-versa because the poor have no power to exploit the environment. In the context of Cambodia, there is a general consensus that the poor, particularly those living in rural areas, are heavily dependent on the environment i.e. common property resources. If the environment is degraded, the livelihoods of those people will definitely be severely affected. This paper aims to address the impact of environmental degradation on poverty in Cambodia which will be presented in the 2011 annual conference of the Asia-Pacific Economic Association.
Sustainable poverty reduction requires access to natural resources. While natural resource tenure includes rights over land, it encompasses other natural resources as well. The property may be farm land, grazing land, forest land, a river, a fishery, wildlife or some other resource, including minerals. Each of these resources possesses particular physical qualities and technical constraints concerning their use, yet they fit into an integrated ecosystem.
The key message of this study is that secure access to tenure for the poor is essential to poverty reduction and the realisation of human rights. This assessment shows that natural resource tenure is inherently complex.Incomplete understanding, and ignorance or disregard for fundamental complexities, may lead to erroneous policy prescriptions and ultimately, to conflict about these resources.
Brazil's lower house passed legislation Tuesday night that would loosen restrictions on how small farmers use their land in the Amazon forest, but lawmakers dropped a change that most worried environmentalists. Environmentalists still fear the revision bill would bring increased deforestation. Operaters of small-scale farms and ranches defend the measure as a way to let them produce to full capacity and boost Brazil's food output.
ADB is supporting an initiative to introduce tens of thousands of biogas systems in rural communities throughout Viet Nam. By turning waste to fuel, families save on their energy bills and enjoy a cleaner environment.
Nam Theun 2, the Lao People's Democratic Republic's (Lao PDR) largest hydropower facility, was officially inaugurated today, signaling a new era for growth, development and poverty reduction in the landlocked Southeast Asian country.
Over 90% of the electricity generated by the project is being sold to Thailand, providing Lao PDR with a $2 billion revenue stream over the next 25 years.
The funds are earmarked for the nationwide improvement of health and education services, and other poverty alleviation programs.
"This project is a testament to the fact that when hydropower projects are done right, in a socially and environmentally responsible manner, the benefits are considerable," said Kunio Senga, Director General of ADB's Southeast Asia Department.
For more on the project, click here.
Protecting drylands is essential. Although deserts cover more than 40% of the planet's land area, they are facing dramatic changes as a result of global climate change, high water demands, tourism and salt contamination of irrigated soils.
The magnificence of the Himalayas belies the daily hardships for the rural poor who live on the mountains of Nepal. But the poorest of the poor are now in the forefront of a controversial new government scheme to reforest barren hillsides. The scheme has given Laxmi, and other poor landless farmers a new lease of life. But wealthier villagers criticize the scheme insisting the land could be put to better use. Earth Report visits Nepal to find out how well the scheme is working.
Volcanoes National Park was the first conservation area ever created in Africa. It protects a vast, and vital, forest ecosystem - one of the last refuges of the mountain gorilla. But balancing the needs of the environment and the local population is not always easy. Staff at the nearby eco-tourism centre used to make a living from poaching but now their knowledge of the rainforest is now shared through music and dance. A wider approach could bring further benefits to local people -- if international schemes begin to finance tropical forests as global assets that help reduce climate change. Produced by tve and EEMP for UNEP.
For more on World Environment Day, click here.