Weather Derivatives: Saving Lives With High Finance

Inspired by Wall Street, the World Food Program is creating weather derivatives, a sophisticated financial instrument that would insure Ethiopian farmers against harvest failures caused by droughts. Applying high finance to the risk that millions lose their lives to drought guarantees that funds will reach Ethiopia within a few weeks. Market mechanisms are a more cost-effective way to protect people from drought. Microfinance leaders BASIX and ICICI are using similar products successfully.

1) “Can Insurance Break Ethiopia’s Vicious Cycle Of Hunger?”2) World Bank (WB): “Piloting Weather Insurance in India.”
3) Subscription only: “Basix India Distributes Agri-Insurance.” India Business Insight. Dec 2003. pg. 53

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