IPCC_Managing Risks of Extreme Events.pdf - Climate Access

Managing the Risks from Climate Extremes at the Local LevelChapter 5Box 5-7 | Taking Collective Action to Improve Livelihoods Strategies: Small-Scale FarmersAdapting to Climate Change in Northern Cape, South AfricaThe Northern Cape Province, South Africa, is a harsh landscape, with frequent and severe droughts and extreme conditions for the people,animals, and plants living there. This has long had a negative impact on small-scale rooibos farmers living in some of the more marginalproduction areas. Rooibos is an indigenous crop that is well adapted to the prevailing hot, dry summer conditions, but is sensitive toprolonged drought. Rooibos tea has become well-accepted on world markets, but this success has brought little improvement tomarginalized small-scale producers.In 2001, a small group of farmers decided to take collaborative action to improve their livelihoods and founded the Heiveld Co-operativeLtd. Initially established as a trading cooperative to help the farmers produce and market their tea jointly, it subsequently becameapparent that the local organization was also an important vehicle for social change in the wider community (Oettlé et al., 2004). TheHeiveld became a repository and source of local and scientific knowledge related to sustainable rooibos production. Following a severedrought (2003-2005) and a perceived increase in weather variability, the Heiveld farmers decided to monitor the local climate and todiscuss seasonal forecasts and possible strategies in quarterly climate change preparedness workshops. These workshops are facilitatedin collaboration with two local NGOs (Indigo and Environmental Monitoring Group). They are also supported by scientists to addressfarmers’ questions in a participatory action research approach – to ensure that local knowledge and scientific input can be combined toincrease the resilience of local livelihoods. The Heiveld Co-operative has been an important organizational vehicle for this learningprocess, strongly supported by their long-term partners, with the focus on supporting the development of possible adaptation strategiesthrough a joint learning approach to respond to and prepare for climate variability and change.The extension of social, participatory, and organizational learning to climate change adaptation illustrated in this case study emphasizesthe significance of identifiable climate change signals, informal networks, and boundary organizations to enhance the preparation ofpeople and organizations for the changing climate (Berkhout et al., 2006; Pelling et al., 2008). Participatory learning is especiallyemphasized (Berkhout, 2002; A. Shaw et al., 2009; R. Shaw et al., 2009). Focusing on what can be learned from managing currentclimate risk is a good starting point, particularly for poor and marginalized communities (Someshwar, 2008).capital by joining informal risk-hedging schemes, becoming clients ofmultiple microfinance institutions, or maintaining reciprocal socialrelationships. Combined analysis of multiple surveys suggests thatabout 40% of households in low- and lower-middle income countriesare involved in private transfers in a given year as recipients or donors(Davies and Leavy, 2007).Households in disaster-prone slum areas in El Salvador spend an averageof 9.2% of their yearly income on risk management, including financingemergency relief and recovery (Wamsler, 2007). A particularly importantinformal risk-sharing mechanism is remittances, or transfers of money fromforeign workers to their home countries (discussed further in Section7.4.4). Household savings can be accessed from a bank, but they can alsobe in the form of stockpiles of food, grains, seeds, and fungible assets.Small savings institutions can be directly impacted by catastrophes, whichcan result in insufficient liquidity to handle a run on their accounts, asoccurred during the 1998 floods in Bangladesh (Kull, 2006). Lackingsufficient savings, many disaster victims take out loans to cover their postdisasterexpenses. The interest rate (18-60%) charged on formal microcredit,while relatively high, generally is far below the rate (120-300%)charged by local moneylenders (Linnerooth-Bayer and Mechler, 2009).Insurance, including micro-insurance, is the most common formal risktransfer mechanism at the local level. An insurance contract spreadsstochastic losses geographically and temporally, and can assure timelyliquidity for the recovery and reconstruction process. As such, it is aneffective disaster risk reduction tool especially when combined withother risk management measures. For example, in most industrializedcountries, insurance is utilized in combination with early warning systems,risk information, disaster preparation, and disaster mitigation. Whereinsurance is applied without adequate risk reduction, it can be adisincentive for adaptation, as individuals may rely on insurance tomanage their risks and are left overly exposed to impacts (Rao andHess, 2009; see Section 5.4.1). Furthermore, insurance can provide thenecessary financial security to take on productive but risky investments(Höppe and Gurenko, 2006). Examples include a pilot project in Malawiwhere micro-insurance is bundled with loans that enable farmers to accessagricultural inputs that increase their productivity (Hess and Syroka, 2005),and a project in Mongolia that protects herders’ livestock from extremewinter weather to reduce livestock losses (Skees et al., 2008).Micro-insurance is a financial arrangement to protect low-income peopleagainst specific perils in exchange for regular premium payments(Churchill, 2006, 2007). Several pilot projects have yielded promisingoutcomes, yet experience is too short to judge if micro-insurance schemesare viable in the long run for local places. Many of the ongoing microinsuranceinitiatives are index-based – a relatively new approach wherebythe insurance contract is not against the loss itself, but against an event322