Corporate Governance

Preparing for a growing number of floods and droughts is clearly a first priority. Planting the right crops and managing them with new digital tools for precision farming are further essential measures for farmers to implement.

To establish climate-resilient operations, farmers in Central America and the Caribbean need access to new tools, seeds and other input materials. And this requires support from governments, multilateral donor organisations, NGOs and the private sector.

Governments will not be able to shoulder the financial burden of adopting new resilient practices without additional support, however. Investors must be attracted, and this is where the insurance industry can play a key role. Insurers pay out in the event of a lost harvest, for example, and thus assure lenders that their clients will remain solvent even if disaster strikes. This makes it easier for investors to finance the sector.

… to Honduras, Guatemala or El Salvador in 2014, nor was there any rain until March 2016.1 It was the worst drought in decades, stretching out over two consecutive years and leaving parched fields and empty reservoirs. Day labourers, subsistence farmers and the poorer population in general were hit particularly hard as food prices soared. Almost one in ten people were dependent on aid.

To prepare for a future climate, decision makers are faced with the following questions:

• What is the potential climate-related damage to our economies and societies over the coming decades?
• How much of that damage can be averted, with what measures and where?
• What investment will be required to fund those measures?

The Economics of Climate Adaptation14 (ECA) methodology helps to answer these questions. The methodology ensures that decision makers engage the right stakeholders, understand the impact of climate change on their economies and identify actions to minimise the effects at the lowest cost to society.