Innovative Climate Risk Financing for the Agricultural Sector in the ASEAN Region (Agri-Climate Risk Financing)
CONTEXT
In most Member States of the Association of Southeast Asian Nations (ASEAN), the agricultural sector is the main source of income for the population. However, productivity has been increasingly affected by extreme weather events. Moreover, there are only limited financial services available to better protect smallholder farmers and their agricultural production against climate risks.
Although climate-risk financing has been recently promoted and agricultural insurance schemes are demonstrating some early successes in the ASEAN region, financial services and the technical aspects of ongoing initiatives still need to be supported with knowledge and innovations. In addition, awareness and financial literacy concerning the climate-risk financing of farmers and relevant actors still require improvement.
OBJECTIVE
Farmers access to resilience-enhancing and gender-responsive climate risk finance has improved.
APPROACHES
The project uses four approaches to meet the objective:
Approach 1: Promoting the topic of climate risk finance in ASEAN through regional technical exchanges and policy documents development on climate risk financing,
Approach 2: Supporting financial institutions in developing and improving climate-risk finance products and provide training for financial institutions,
Approach 3: Increase the professional competences of farmers and non-financial institutions by developing a training program and conducting trainings for partner organisations and target groups on the topic,
Approach 4: Linking sustainability standards to climate-risk finance by contributing to a standard revision process and participating in consultation processes that link agricultural sustainability standards to gender-responsive climate-risk finance.
ASEAN Member State at the Regional Level:
The project aims to facilitate regular technical exchanges for all ASEAN member states by both providing expert knowledge and peer exchanges. To promote and collaborate on the topic of climate risk financing for the agricultural sector, the project focuses on consulting relevant ASEAN working groups, initiatives in the areas of agriculture, finance and climate. Expectedly, the policy recommendations or the updated workplan can be further promoted at the ASEAN high-level in the future leading the way to constructive regional cooperation, and allows AMS, relevant ASEAN bodies and sectors to work together long-term and across country borders.
Implementation at the National Level (Indonesia, Thailand and Vietnam):
In countries, the project will be focusing on the rice (Thailand and Vietnam) and cacao (Indonesia) value chain and will be providing advice and co-design trainings to enhance the technical capacity of stakeholders from financial institutions and technology providers. At the same time, the project will promote farmers’ access to resilience-enhancing and gender-responsive climate risk financing products and services by offering trainings to smallholder farmers and non-financial institutional actors (government, cooperatives, NGOs), e.g. on financial literacy on climate risk financing to increase uptake of financial products and services. In addition, the project will link sustainability standards and gender-responsive climate risk financing, and pilot-test the concept. This includes, for example, the draft basic mechanisms of agricultural sustainability standards and gender responsive climate risk finance products in collaboration with different stakeholders, and recommendations for action and case studies from the project implementation.
FINANCED BY
German Federal Ministry for Economic Cooperation and Development (BMZ)
COUNTRY
10 ASEAN member states with implementation in Indonesia (cacao value chain), Thailand and Vietnam (rice
value chain)
PROJECT PARTNERS
ASEAN Secretariat, ASEAN Working Group on Crops (ASWGC)
PROJECT DURATION
01/2023 – 12/2025
Mr. Julian Tost
Project Director
Email: julian.tost(at)giz.de