National Drought Insurance for Malawi

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dc.creatorNucifora, Antonio
dc.creatorSyroka, Joanna
dc.date2014-09-02T21:31:12Z
dc.date2014-09-02T21:31:12Z
dc.date2010-01
dc.date.accessioned2026-07-01T01:13:08Z
dc.descriptionMalawi has experienced several catastrophic droughts over the past few decades. The impact of these shocks has been far reaching, and the resulting macroeconomic instability has been a major constraint to growth and poverty reduction in Malawi. This paper describes a weather risk management tool that has been developed to help the government manage the financial impact of drought-related national maize production shortfalls. The instrument is an index-based weather derivative contract designed to transfer the financial risk of severe and catastrophic national drought that adversely impacts the government's budget to the international risk markets. Because rainfall and maize yields are highly correlated, changes in rainfall -- its timing, cumulative amount, and distribution -- can act as an accurate proxy for maize losses. An index has been constructed using rainfall data from 23 weather stations throughout Malawi and uses daily rainfall as an input to predict maize yields and therefore production throughout the country. The index picks up the well documented historical drought events in 2005, 1995, 1994, and 1992 and a weather derivative contract based on such an index would have triggered timely cash payouts to the government in those years. This innovative risk management instrument was pioneered in 2008/2009 by the Government of Malawi, with the assistance of the World Bank, and was a first for a sovereign entity in Africa. Several piloting seasons will be necessary to understand the scope and limitations of such contracts, and their role in the government's strategy, contingency planning, and operational drought response framework.
dc.formatapplication/pdf
dc.formattext/plain
dc.identifierhttp://documents.worldbank.org/curated/en/2010/01/11634487/national-drought-insurance-malawi
dc.identifierhttps://hdl.handle.net/10986/19950
dc.identifierhttps://doi.org/10.1596/1813-9450-5169
dc.identifier.urihttp://hdl.handle.net/123456789/416207
dc.languageEnglish
dc.languageen_US
dc.publisherWorld Bank, Washington, DC
dc.relationPolicy Research Working Paper;No. 5169
dc.rightsCC BY 3.0 IGO
dc.rightshttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCOUNTING
dc.subjectACTUAL COST
dc.subjectADMINISTRATIVE COSTS
dc.subjectAGRICULTURAL PRODUCTION
dc.subjectASSET MANAGEMENT
dc.subjectBANK INTERMEDIATION
dc.subjectBASIS RISK
dc.subjectBROKERAGE
dc.subjectCALL OPTION
dc.subjectCAPACITY BUILDING
dc.subjectCAPITAL MARKET
dc.subjectCHECKS
dc.subjectCLIMATE CHANGE
dc.subjectCLIMATE MONITORING
dc.subjectCOMMODITY RISK MANAGEMENT
dc.subjectCOMPETITIVE MARKET
dc.subjectCONTINGENCY PLAN
dc.subjectCONTINGENCY PLANNING
dc.subjectCONTINGENCY PLANS
dc.subjectCOVERAGE
dc.subjectCRISES
dc.subjectDATA QUALITY
dc.subjectDEFICITS
dc.subjectDERIVATIVE CONTRACT
dc.subjectDERIVATIVE CONTRACTS
dc.subjectDERIVATIVE MARKET
dc.subjectDERIVATIVE TRANSACTION
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPING COUNTRY
dc.subjectDISASTER
dc.subjectDISASTER AID
dc.subjectDISASTER RELIEF
dc.subjectDISASTER RESPONSE
dc.subjectDISASTER RISK
dc.subjectDISASTERS
dc.subjectDOMESTIC BORROWING
dc.subjectDROUGHT
dc.subjectDROUGHTS
dc.subjectEARLY WARNING
dc.subjectEARLY WARNING SYSTEM
dc.subjectECONOMIC GROWTH
dc.subjectEMERGENCY FINANCING
dc.subjectEMERGENCY RELIEF
dc.subjectEMERGENCY RESPONSE
dc.subjectEMERGENCY RESPONSES
dc.subjectEMERGENCY SITUATIONS
dc.subjectEMPLOYMENT
dc.subjectENTRY BARRIERS
dc.subjectEQUIPMENT
dc.subjectEXCHANGE RATE
dc.subjectEXPENDITURE
dc.subjectEXPENDITURES
dc.subjectFAMINE
dc.subjectFARMERS
dc.subjectFINANCIAL INSTRUMENT
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL RISK
dc.subjectFINANCIAL RISKS
dc.subjectFINANCIAL SAVINGS
dc.subjectFINANCING REQUIREMENTS
dc.subjectFISCAL DEFICIT
dc.subjectFLOODING
dc.subjectFLOODS
dc.subjectFOOD RELIEF
dc.subjectFOOD RESERVE
dc.subjectFOOD SECURITY
dc.subjectFOOD SHORTAGES
dc.subjectFOREIGN EXCHANGE
dc.subjectFOREIGN EXCHANGE RESERVES
dc.subjectGLOBAL CLIMATE CHANGE
dc.subjectGLOBALIZATION
dc.subjectGOVERNANCE ISSUES
dc.subjectGOVERNMENT BORROWING
dc.subjectGOVERNMENT FINANCES
dc.subjectINCOME
dc.subjectINFLATION
dc.subjectINNOVATIONS
dc.subjectINSTRUMENT
dc.subjectINSURANCE
dc.subjectINSURANCE CONTRACT
dc.subjectINSURANCE CONTRACTS
dc.subjectINSURANCE MARKET
dc.subjectINSURANCE MARKETS
dc.subjectINSURANCE PREMIUM
dc.subjectINSURANCE PRODUCTS
dc.subjectINSURANCES
dc.subjectINTEREST COSTS
dc.subjectINTEREST PAYMENTS
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL DEVELOPMENT
dc.subjectINTERNATIONAL MARKET
dc.subjectINTERNATIONAL MARKETS
dc.subjectINVESTING
dc.subjectINVESTMENT DECISIONS
dc.subjectINVESTMENT STRATEGY
dc.subjectLEVEL OF CONFIDENCE
dc.subjectLEVEL OF RISK
dc.subjectMACROECONOMIC INSTABILITY
dc.subjectMACROECONOMIC STABILITY
dc.subjectMARKET ACCESS
dc.subjectMARKET ENTRY
dc.subjectMARKET PLAYERS
dc.subjectMARKET PRICE
dc.subjectMETEOROLOGICAL ORGANIZATION
dc.subjectMITIGATION
dc.subjectNATURAL HAZARDS
dc.subjectOPPORTUNITY COSTS
dc.subjectPORTFOLIO
dc.subjectPORTFOLIOS
dc.subjectPREMIUMS
dc.subjectPRICE DISCOVERY
dc.subjectPRICE RISK
dc.subjectPRICE RISK MANAGEMENT
dc.subjectPRODUCTIVE INVESTMENTS
dc.subjectPROGRAMS
dc.subjectPUBLIC DEBT
dc.subjectPUBLIC FINANCES
dc.subjectRATES
dc.subjectRATING AGENCIES
dc.subjectREINSURANCE
dc.subjectREINSURER
dc.subjectRESERVE
dc.subjectRESERVE BANK
dc.subjectRESERVE FUND
dc.subjectRESERVES
dc.subjectRETURN
dc.subjectRISK MANAGEMENT
dc.subjectRISK MANAGEMENT STRATEGIES
dc.subjectRISK MANAGEMENT TOOL
dc.subjectRISK MANAGEMENT TOOLS
dc.subjectRISK MARKETS
dc.subjectRISK MITIGATION
dc.subjectRISK TRANSFER
dc.subjectSOVEREIGN ENTITY
dc.subjectSPOT MARKET
dc.subjectTECHNICAL ASSISTANCE
dc.subjectTELECOMMUNICATIONS
dc.subjectTRANSACTION
dc.subjectTREASURY
dc.subjectWEATHER DERIVATIVE
dc.titleNational Drought Insurance for Malawi

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