POLICY IMPLICATIONS OF PRICE DYNAMICS AND THE WAY FORWARD - Food Security, Food Prices and Climate Variability - page 184

significant reductions in final seasonal totals (Husak et al ., 2013). Earlier warning of food pro-
duction problems will enable organizations such as WFP and FEWS NET to monitor and
identify likely food security and food access problems that these production declines may
cause. Improvements in rainfall and temperature-based moisture datasets in the next few years
will enhance our ability to remotely estimate poor growing conditions that cause crop
failure.
The relatively short record of satellite rainfall estimates also presents a limitation to under-
standing the range of drought events required for adaptation to these events. Given that the
impacts of drought on regional food production are a function of the severity and spatial extent
of dryness, there exists a need to understand better the probability of dry events in a way that
captures not only the likelihood of drought at a single location but the likelihood of regions
experiencing dry conditions. Husak et al . (2013) described a method to create seasonal rainfall
scenarios from existing satellite rainfall estimates to understand better the likelihood of extreme
events. Rainfall simulations can better capture the range and likelihood of growing conditions
in areas where the short satellite estimates prove inadequate on their own. The approach also
captures rainfall conditions in such a way as to enable the simulation of crop growing intervals,
rather than calendar intervals, and to play those conditions out for the remainder of the season
to give a sense of the remaining uncertainty in moisture conditions. Providing this information
to decision makers can assist in determining the timing and amount of aid needed to mitigate
food shortages resulting from poor rainfall performance (Husak et al ., 2013).
Unfortunately, there are constraints to using weather predictions related to legitimacy,
salience, access, understanding and capacity to respond (Husak et al ., 2013). Even in devel-
oped country agricultural systems where resources are far more abundant, logistical constraints
restrict the optimal timing of planting to just a few days at the beginning of the season. Few
farmers can decide to move from corn to millet on the basis of a forecast, due to the enor-
mously different economic value, required growing conditions, equipment, expertise and
seed availability of the two crops. Once the crop is in the ground little can be done to change
the progress of the crop's response to growing conditions.
Research is being done that will improve our understanding of what a good forecast is,
how forecasts could be used, and on ways to incorporate observations with forecasts to enable
a comprehensive description of potential climate impacts on agriculture in a particular place.
These location-based probabilities can be used to develop risk management tools priced and
sized according to the likelihood of a yield-reducing drought.
Index insurance to reduce the impact of weather shocks on income
Information on weather and climate can enable the implementation of agriculture insurance
across large areas to provide basic weather-risk and financial support to farmers who are vul-
nerable to food insecurity as a result of weather shocks (Helmuth et al ., 2009). Index or para-
metric insurance providing an indemnity payout that depends on exceeding a threshold
variable such as water level (for floods) or consecutive days without rain (for droughts) could
fill that gap. These programs provide insurance against income drop, but do not help protect
consumption. There are a number of insurance companies and non-proit development
organizations working to develop index insurance for smallholder farmers across the develop-
ing world. Index insurance can facilitate the availability of credit and enable widespread
increases in the use of fertilizers and improved seeds.