Risks, Vulnerabilities, Other Emerging Challenges

"Risk, vulnerability and shock limit poor people's participation in the growth process and cause a huge number of people to fall back into poverty", Sun Yinhong of China opens the session on Dealing with Risk and Vulnerability at the Project Level.

Risks can be natural/environmental, health related, social, economic and political that affect households, communities and nations in different and varied proportions, Ganesh Thapa of IFAD proceeds as he introduced the topic to more than 30 participants in the session. Ganesh showed that individuals, groups, markets and the public sector either informally or formally help the poor reduce, mitigate or just cope with risks.

Over the years, IFAD has shown its support for risk management in projects that reduced risks like watershed development and promotion of savings; risks mitigation through diversification such as projects that provided micro finance and formed producers groups; risks mitigation through insurance e.g. weather-based insurance; and, by providing loans to projects that respond to disasters e.g. Tsunami response projects in Sri Lanka, Maldives, and India.

The China's Pilot of Weather Index Insurance (WII): Drought and Heatwave Index Insurance for Rice is an example of a risk mitigating project supported by IFAD. This project, as Weijing Wang of China shared, is favorable to small farmers in Changfeng, Anhui Province. The WII has less adverse selection process and has potential for reinsurance arrangement.

Anura Herath of Sri Lanka showed the risks in adopting new technologies in the Dry Zone Livelihood Support & Partnership Programme of Sri Lanka and suggested that in future project designs to:

1. Identify a menu of technologies;
2. Include strategies using knowledge management (KM) tools to update projects with new technologies;
3. Include a clear implementation strategy, e.g. mechanism for financing technology adoption; and,
4. Propose crop/animal insurance.

The cotton, wheat and vegetable produced in Tajikistan are prone to risks related to weather and pests. Hafij Muninjanov disclosed that his government is working on a crop insurance as part of the Tajikistan Agriculture Reform Programme.

There are also institutional related risks involved in implementing IFAD supported projects, Lamkoise Baite of India added. The risks are related to design and actual implementation which affect the IFAD headquarters in Rome, the IFAD country offices, the project offices and the community themselves.

Further, to deal with risks and vulnerabilities at the Project level, the participants of the session proposed to:

1. Learn from initiatives of other projects; e.g. alternating crops, utilisation of communal labour, investing on small livestock;
2. Explore on insurances that put premium to farmers that better manage their land and other resources;
3. Do better risk/vulnerability analysis in project design processes (IFAD Climate Screening Tool can be used); and,
4. Have a study on prioritizing risks/vulnerabilities where IFAD shall focus on its interventions.

Risk and vulnerability are dynamic. New risks and vulnerabilities emerge over time. There is no project that is foolproof to risks and vulnerabilities. However, IFAD projects have to help poor people respond to risks, vulnerabilities and other emerging challenges.

Thomas Elhaut, IFAD APR Director, remarked that IFAD projects should exercise flexibility to capture and respond to emerging risk and vulnerability issues while at the same time strike a balance in ensuring quality in project implementation to help poor people overcome poverty.

This blog entry was submitted by Yolando C. Arban, CPO- IFAD Philippines Country Office.