Drought Insurance for the Third World

After a year of natural disasters, the international community may shrug about the possibility of 6 million Kenyans, Ethiopians and Somalis facing drought and possible starvation. In response, the World Food Program and the World Bank have developed a new plan to replace aid: famine insurance. The new model of relief shifts emphasis from donations to arrangements with international financial corporations. The notion of famine insurance actually has precedent in the late 1990s, with groups of farmers from India to Malawi, from Nicaragua to Ukraine, insuring against weather disasters with private companies. Ethiopia is the first country with an “insurance policy for humanitarian emergencies,” taken out with the French company Axa Re. If there is no drought, then companies pay no benefits and make a profit. The policies rely on quantitative weather measurements, but provide little protection against corruption or other risks. – YaleGlobal