Microinsurance India

FESA Micro Insurance Report – Methodology, Validation and Contract Design

The FESA Report can be purchased for 150 Euro

The FESA project is one of the Milennium projects of the Dutch Minister of Development Cooperation. The objective of the project is to develop a Meteosat based drought micro-insurance system that can reach every farmer in Africa. Partners in the project are MicroEnsure , RABO Development and Ecorys.

The FESA approach is based on 30 years of hourly Meteosat data, which have been processed to climatic data products, in particular temperature, radiation and evapotranspiration. These are then used to generate crop yield estimates or indices and to derive the necessary drought probability statistics for every location on a 3 km grid. The indicators used for drought and crop failure are the growing season relative evapotranspiration (RE) and relative yield (RY).

The first phase of the project has been completed. This phase adressed data base development, data validation and elements of insurance design. A comparative burn-study was carried out for 29 locations in Tanzania, using ground measured precipitation and satellite derived evapotranspiration respectively. The study has revealed great opportunities for reducing basis risk, scaling up and cost reduction.

The results have been consolidated in the printed report “FESA Micro-insurance: methodology, validation, contract design”. The report price is 150 euro. It can be ordered by sending us an email through our ordering page. Please write “FESA report” in the first line. Order it today by using this contact form.

FESA Microinsurance Report

Report contents

FOREWORD by Prof Kees Stigter

Founding president of International Society for Agricultural Meteorology

7
1 INTRODUCTION 9
1.1 Traditional crop insurance 10
1.2 Index-based insurance 10
1.3 Satellite indices 11
1.3.1 Reflection indices 12
1.3.2 Precipitation 12
1.3.3 Evapotranspiration 13
1.3.4 Crop yield 13
1.4 Report objective and scope 13
2 DERIVING CLIMATIC DATA FROM METEOSAT 15
2.1 Rainfall monitoring 15
2.2 Evapotranspiration monitoring 16
2.2.1 Calibration 16
2.2.2 Atmospheric correction 16
2.2.3 Air temperature mapping 17
2.2.4 Observation height air temperature 17
2.2.5 Net radiation 18
2.2.6 Sensible heat flux 18
2.2.7 Actual evapotranspiration 18
2.2.8 Relative evapotranspiration 19
3 CROP YIELD ESTIMATION AND FORECASTING 21
3.1 Conversion of solar energy into dry matter 22
3.2 Water limitation to growth 22
3.3 Light use efficiency 22
3.4 Dry matter production 23
3.5 Respiration loss 23
3.6 Net dry matter production 24
3.7 Crop calendar 24
3.8 Relative and difference yield 25
3.9 Combination with geographic information 26
4 VALIDATION OF METEOSAT DERIVED DATA 29
4.1 Validation approach 29
4.2 Validation pitfall 30
4.3 Validation results 31
5 DATABASE GENERATION AND DATA PROPERTIES 33
5.1 Extracting a long term data set from Meteosat 33
5.2 Similarity and difference of evapotranspiration and precipitation data 34
5.3 Comparison of evapotranspiration and precipitation time series 34
5.4 Mass balance of evapotranspiration and precipitation 35
5.5 Phase shift between evapotranspiration and precipitation 37
5.6 Distribution of decadal evapotranspiration and precipitation data 37
5.7 Determination of percentile trigger values 37
6 ELEMENTS OF CONTRACT DESIGN 39
6.1 Current state of the art 39
6.1.1 Starting the growing season 41
6.1.2 Contract parameters vary considerably 41
6.1.3 Critical dependence on growing season start 41
6.2 Using historic data series for timing the growing season 43
6.3 Determination of the sowing window 43
6.4 Comparing evapotranspiration and precipitation based insurance performance 45
6.4.1 Trigger percentiles 46
6.4.2 Growing season structure 47
6.5 Towards scaling up and cost reduction 49
6.5.1 Trigger modelling 49
6.5.2 Zoning approach 51
6.6 Building trust 51
6.7 Summarized findings in this chapter 53
7 SUMMARY AND CONCLUSIONS 55
ACKNOWLEDGEMENTS 59
REFERENCES 61
ANNEX A:  FESA VALIDATION OF EWBMS CLIMATIC DATA 65
A.1 Validation of air temperature 65
A.2 Validation of radiation 70
A.3 Validation of sensible heat flux 72
A.3.1 Validation with CARBOAFRICA data 72
A.3.2 Validation with Marconi FLUXNET data 73
A.4 Conclusion 77
ANNEX B:  FESA VALIDATION OF ECGM CROP YIELDS 79
B.1 Validation data sources 79
B.2 Validation of satellite derived crop yield 79
B.3 Crop yield validation results 81
B.3.1 West Africa 81
B.3.2 Southern Africa 81
B.3.3 Burkina Faso 82
B.3.4 Tanzania 84
ANNEX C:  VALIDATION RESULTS FROM RECENT PROJECTS 87
C.1 China: YellowRiver Basin 87
C.2 Mongolia 90
C.3 Netherlands 93
Abhay N

Author : 

Abhay is the founder and managing editor of India Microfinance. He is passionate about microfinance, financial inclusion and social entrepreneurship in India.

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