Climate Risk Management in Senegal: Climate Change Impact, Farmers' Vulnerability, and Risk Financing Mechanisms through Insurance for Rice Farmers

Abstract

Climatic risks, droughts and floods are increasing and appear to be a major threat to the agricultural economies of the Sahelian countries, particularly those of West Africa, given their heavy dependence on rainfed agriculture. To this end, climate change is likely to exacerbate the vulnerability of a large number of farmers already characterized by low means of substances and limited possibilities of choice to adapt to climate risks. Government funding resources being limited, the prioritization of national adaptation policies is therefore an important aspect of effectively meeting the needs of farming communities. This research work examines the impact of climate change on the rice sector in Senegal, the vulnerability of rice farmers and the means of financing climate risks. Autoregressive Distributed Lag Model (ARDL), index Method and Endogenous Switching Regression Model (ESRM) are used to assess the impact of climate change on rice sector GDP, rice farmers' vulnerability and impact of insurance on household income respectively. Using time series data for the period 1961-2020, the estimated results show that in the short term, an increase in precipitation and temperature of 1% increases GDP per capita by 0.54% and by 3. 52% respectively, ceteris paribus. The vulnerability assessment results carried out using an integrated approach combining climatic, socio-economic, socio-demographic and environmental variables show that out of 33 municipalities studied, two (2) are at a very high level of vulnerability of order 0.61 to 0.70, six (6) are in a state of high vulnerability of 0.53 and 0.60 and another six (6) are in a moderate situation (0.46 to 0.52), this which gives an idea of the order of priority of adaptation policies in the different localities considered. Moreover, the results revealed that agricultural insurance is a good financial instrument to deal with climate risks. The policy implications that emerge from this research suggest that communication about insurance and building the capacity of farm households through agricultural extension and advisory services facilitates understanding and encourages farm households to use insurance to climate risk management. The strengthening of human capital through education and training, the development of institutional capital through the development of basic social infrastructure, transport and credit institutions, as well as economic capital through the promotion of agricultural insurance and irrigation development, constitute fundamental policy measures to reduce vulnerability and improve resilience of the farming communities studied.