Bangladesh: Pilot Project on Weather Index-Based Crop Insurance

Sovereign Project | 46284-001

Summary

The proposed grant aims to develop and implement weather index-based crop insurance in Bangladesh as an adaptation tool to reduce the climate variability and extreme weather

vulnerability of agriculture sector, especially impacting small farm households. Climate induced disasters and other extreme weather events mostly affecting the country's agricultural

production such as flood, drought, cyclone, storm surge and salinity intrusion are directly related to climate change which are threatened to have more intense and frequent occurrence.

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Project Name Pilot Project on Weather Index-Based Crop Insurance
Project Number 46284-001
Country Bangladesh
Project Status Approved
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 9172-BAN: Pilot Project on Weather Index-Based Crop Insurance
Japan Fund for Poverty Reduction US$ 2.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Agriculture and Natural Resources - Agricultural policy, institutional and capacity development

Gender Equity and Mainstreaming Some gender elements
Description

The proposed grant aims to develop and implement weather index-based crop insurance in Bangladesh as an adaptation tool to reduce the climate variability and extreme weather

vulnerability of agriculture sector, especially impacting small farm households. Climate induced disasters and other extreme weather events mostly affecting the country's agricultural

production such as flood, drought, cyclone, storm surge and salinity intrusion are directly related to climate change which are threatened to have more intense and frequent occurrence.

Project Rationale and Linkage to Country/Regional Strategy

Effective disaster risk management and climate change adaptation approaches should go beyond traditional credit provision and disaster relief programs to effectively safeguard and

reach wider rural population. This can be achieved through weather index-based crop insurance as an innovative risk adaptation tool for all types of farmers including small farm households. Weather index-based is recognized to overcome the weaknesses of traditional agricultural insurance, such as moral hazards, adverse selection, costly and time consuming farm assessment, earlier introduced in the country.

Impact Increased resilience of farm households to climate and disaster risks
Project Outcome
Description of Outcome Improved access to risk financing for weather risks
Progress Toward Outcome Technical advisory group (TAG) mobilized on 27 May 2015. Activities have kicked-off, including procurement of automated weather-stations equipment that was delayed pending identification of delivery points by the TAG consultants.
Implementation Progress
Description of Project Outputs

1. Viable WIBCI products are pilot tested.

2. The policy and regulatory framework and guidelines for promoting WIBCI are formulated and strengthened.

3. Capacity building and awareness activities implemented and weather infrastructure upgraded

4. Project Management Support strengthened.

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Since the project will not have any physical intervention, it will also not create any adverse environmental impacts.
Involuntary Resettlement The project will not involve any land acquisition, and none of the project activities will result in any physical or economic displacement of people.
Indigenous Peoples Indigenous peoples will not be directly or indirectly affected by any of the project activities.
Stakeholder Communication, Participation, and Consultation
During Project Design During the project conceptualization and design stage, extensive consultations were undertaken with key government and nongovernment stakeholders, international partner organizations, and community members. All the stakeholders' views on the relevance and potential challenges of implementing WIBCI have been factored into the project design. Participation by key stakeholders such as insurance companies, distribution partners, farmers, and concerned government agencies will be an integral part of the WIBCI product and process design. A strong feedback and monitoring system will be built into the project to ensure that the views of rural clients, especially small and marginal farmers, are being taken into consideration in the iterative process of improving the pilot product.
During Project Implementation Participation by key stakeholders such as insurance companies, distribution partners, farmers, and concerned government agencies will be an integral part of the WIBCI product and process design. A strong feedback and monitoring system will be built into the project to ensure that the views of rural clients, especially small and marginal farmers, are considered in the iterative process of improving the pilot product. Capacity building and awareness-raising activities will also enable farmers to grasp the concept in the early stages of development of the WIBCI, help manage their expectations from the project, and provide feedback as implementation progress.
Business Opportunities
Consulting Services Consultants will serve as a Technical Advisory Support Group and a Project Management and Finance Support Group. These consultants and others will be recruited in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time) to provide services for technical support, implementation, management, and progress monitoring of the JFPR grant.
Procurement All procurement under the JFPR grant will be conducted in accordance with ADB's Procurement Guidelines (2010, as amended from time to time).
Responsible ADB Officer Rezaul K. Khan
Responsible ADB Department South Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, SARD
Executing Agencies
Bank and Financial Institutions Division-MOFARIJIT@FINANCE.GOV.BDBangladesh Secretariat
Dhaka-1000 Bangladesh
Ministry of FinanceEconomic Relations Division (ERD), MOF
Sher-e-Bangla Nagar, Dhaka_1207
Bangladesh
Timetable
Concept Clearance 02 Jul 2012
Fact Finding 04 Jul 2012 to 18 Jul 2012
MRM 22 Aug 2012
Approval 27 Mar 2013
Last Review Mission -
Last PDS Update 27 Jul 2015

Grant 9172-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Mar 2013 25 Mar 2014 25 Mar 2014 31 Dec 2016 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.00 Cumulative Contract Awards
ADB 0.00 27 Mar 2013 0.00 1.09 55%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 2.00 27 Mar 2013 0.00 0.27 14%

Safeguard Documents

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Evaluation Documents

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