A novel financial product against future locust outbreaks
- M. Hinge, E. Wilkinson, S. Shah, N. Wescombe
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Summary
Hinge et al. (2021) propose a novel financial product for locust outbreaks in the Greater Horn of Africa, designed to trigger rapid funding for control operations once an outbreak is detected. Unlike traditional insurance, the payout would directly fund locust suppression efforts, coordinated by the Food and Agricultural Organization of the UN (FAO), rather than providing cash to affected areas.
Abstract
As part of ongoing efforts to expand resilience finance across Africa, we propose the creation of a novel financial product targeting locusts in the Greater Horn of Africa, which will allow a quick and effective response to any future outbreaks across the region. Once established, this product would deliver a fast response to a future locust outbreak as soon as it is detected and the triggers attached are met. However, unlike traditional insurance, the proposed mechanism would pay to the affected areas as control operations to suppress the outbreak rather than in cash, with the payout used to fund these operations. These services would be procured in advance, and once needed would be coordinated by the FAO in line with recent effective practice and their guidelines.