Consultant: Introducing Climate Risk Transfer Mechanism - Index Insurance Pilot Scheme to the Farmers of Zaravshan Region of Tajikistan

Tajikistan is the poorest and the most fragile country of the CIS region. Deteriorating public service infrastructure, weak governance, low per capita incomes, persistent energy shortages and increasing volatility of climate related disasters constitute main development challenges requiring urgent attention. Rapidly growing remittances from hundreds of thousands of migrants to (mostly) Russia propped up the Tajik economy in recent years, but now the economic stresses are becoming increasingly apparent. There is the immediate and highly visible economic crisis caused by the closely interrelated threats to energy, water and food security that were painfully brought to light during the last winter and recently have been compounded by the country’s macroeconomic difficulties. Climate change already adds to the current complexity of multiple stresses and will place severe bio-physical limitations to climate sensitive sectors of hydropower, irrigation and agriculture. Availability of water at right time and in right amounts will be a growing challenge imposed to already fragile systems of energy, water and food production.

UNDP Programme Context:

UNDP in partnership with the government and other development partners strives to address some of the above stated barriers. With the primary mandate to reduce poverty and promote sustainable human development the UNDP in Tajikistan has built a comprehensive framework programme - “Communities Programme” that is designed to enhance accountability at local level, increase access to rural finance, and improve infrastructure and the delivery of basic services. Overall objective of the programme is to reduce rural poverty through improved economic opportunities, increase access to rural finance and improve infrastructure, delivery of basic services and improved governance and accountability systems.

All local infrastructure rehabilitation will undergo climate and disaster risk screening and the programme will promote land and water productivity by (i) improving local climate variability data (through e.g. hazard mapping (ii) improving agronomic measures; (iii) improving household assets and implementing labour intensive adaptations through employment guarantee schemes; (iv) promoting off-farm enterprises and livelihoods; (v) testing community-based risk transfer mechanisms (weather-index insurance); and (vi) diversifying local energy sources for sustainable access.

Purpose

Testing Index Insurance (or other risk transfer / absorption mechanism) in the Framework of CP:
The main purpose is to explore the feasibility of introducing index insurance scheme on the pilot basis through the UNDP’s Communities Programme in the Zaravshan region of Tajikistan. This is to explore how this can help people manage weather risk that is at least partially responsible for keeping them in the poverty traps. In recent years there has been a shift away from insuring against poor crop yields toward insuring directly against bad weather. A contract is written against an index establishing a relationship between lack of rainfall and crop failure, verified by long historical records of both rainfall and yields. Farmers collect an immediate payout if the index reaches a certain measure or “trigger,” regardless of actual losses, so farmers still have an incentive to make productive management decisions. This removes “moral hazard” and other problems inherent in crop insurance, such as high costs associated with settling claims on a case-by-case basis, through field visits etc. When well designed, they may also permit farmers to enhance adaptive capacity through greater risk-taking experimentation in agriculture practices not possible in crop-insurance schemes. In the context of Tajikistan where financial institutions are still very weak, this can be arranged by taking community-based model, whereby local communities, Micro-finance Institutions (MFIs), or Jamoat / Community resource Centres (JRCs) develop and distribute the product, manage the risk pool, and absorb the risk. As with insurance mutuals (cooperatives), there is no involvement on the part of commercial insurers. Micro-insurance schemes can require the uptake of insurance as a condition for extending loans or savings arrangements to their clients. Climate data (precipitation and / or temperature) limitations from the Zaravshan weather stations can complicate the design of the product. However, the existing experience from the developing countries in Asia and Africa indicate that it is possible to design the product that is not sensitive to data limitations.

• Explore the feasibility of introducing index insurance scheme, on the pilot basis, through the UNDP’s Communities Programme in the Zaravshan region of Tajikistan and / or other regions;
• Explore the current conditions of accessing credit to farmers, both individually and collectively;
• Identify key organisations such as MFIs, JRCs etc and their potential role in the index insurance scheme;
• Identify the key limitations, both institutional and data related, that can preclude the feasibility of the insurance and the potential ways of addressing them;
• Explore the current measures of compensation to farmers and subsidies that may distort incentives and encourage promotion of ineffective or inappropriate products;
• Identify the ways to design the product that can ensure more effective use of the subsidies;
• Identify the ways how this product can contribute to adaptation and play a role in managing uncertainties associate with climate change;
• Design and deliver the training and awareness raising workshop/s to the CP programme staff and key stakeholders in index insurance and seek for the feedback in developing a well customised product;
• Based on the assessments above design the index insurance product for development and disaster preparedness and relief in Zaravshan and / or other regions of Tajikistan;
• Help the CP programme team and key stakeholders test the product and provide feedback and guidance in modifying the product (with clear rules, including payout procedures);
• Put forward a set of recommendations on how to scale up the scheme in a wider country context of Tajikistan, if appropriate.

1. training workshop - October 20
2. feasibility study - November 20

• Strong interpersonal and communication skills;
• Strong cultural sensitivity and ability to work in multi-cultural environments;
• Ability to work effectively with stakeholders with different backgrounds, including government officials and civil society;
• Ability to work efficiently under pressure;
• Strong skills in the use of computers for word processing, spreadsheets, database statistical data analysis and internet-based communication tools;

• Advanced university degree (Master's or PhD level) in environmental economics or other related field;
• At least 7 years of work experience in the field of climate risk management, especially in the area of weather index insurance;
• Demonstrated experience in helping design affordable and feasible index insurance products in various countries of the world;
• Experience in conducting research/analytical studies combined with capacity development efforts;
• Affiliation with recognized international think-tanks, applied research institutes and/or universities is expected;
• Demonstrated skills in drafting reports, knowledge and competencies/experience in policy analysis, capacity development and mainstreaming issues such as gender;
• Experience with a UN organization is an asset;
• Fluency in both written and spoken English, knowledge of Russian is an asset.