Human Security in Action: Meso-Level Index Based Flood Insurance

I’m going to continue the theme from my previous post on Bolsa Família regarding policies around the world that reflect the principles of the Human Security (in this case, the Environmental Security) paradigm. This article explores how a new insurance scheme for floods can help alleviate human migration patterns in Bangladesh.

The coastal zone of Bangladesh is prone to multiple environmental threats. Cyclones, storm surges and floods, are all regular occurrences within this low-lying nation. Such areas have been identified as agro-ecologically disadvantaged regions. Some of the underlying threats emanating from the onset of coastal encroachment are a reduction in sources of safe freshwater, coastal erosion, high groundwater arsenic content, waterlogging, sharp upticks in water and soil salinity. Complicating matters further, poverty is highly concentrated on the coast, making natural disasters and climate change-related events difficult to overcome for the 46% of Bangladeshis who reside along the river deltas and Indian Ocean. In addition to the restoration of the natural environment, a comprehensive approach is needed to fully allow Bangaldeshis to adapt to one of the most extreme aspects of climate change: natural disasters.

Environmental migration within Bangladesh is a common form of adaptation to environmental stress due to the displacement that occurs from natural disasters. Despite international natural disaster frameworks already in place, such as the Hyogo Framework, these policies intentionally do not address re-construction or relief at the local level because they are merely policy recommendations. Between 1970-2009, 39 million people were displaced by floods and cyclones. Half of Bangladesh’s population fully relies upon agriculture, natural disaster severely impedes the livelihood of these individuals. Thus, when these events do occur, many are forced to seek employment elsewhere, namely urban areas and parts of India. 180,000 Bangladeshis migrate to Assam every month, up to a total of 2.16 million annually. Natural disasters are a grim reality–Bangladesh is one of the four nations most prone to these events on Earth. Thus, an insurance scheme in which pre-determined flood thresholds trigger speedy compensation offers hope for poor people in flood-prone Bangladesh.

This insurance scheme, or “Meso-Level Index Based Flood Insurance,” is a weather based index insurance plan piloted and invented by Oxfam-Bangladesh and the Center for Insurance and Risk Management. It is theoretically advantageous over the long-term because it rolls government payouts when a certain pre-agreed damage threshold is crossed after a natural disaster. Meso-level insurance systems are more efficient because they are assessed on the basis of water depth and duration of flooding. Unlike traditional government damage assessments, these funds are paid out soon after the flooding, or monsoon, season to individuals following an event, allowing for re-construction soon after a disaster strikes.

Non-governmental organizations are responsible for issuing funds that come mainly from the Swiss government. Families can receive up to approximately $30 USD per household. However, there is much scrutiny surrounding this new insurance plan due to the difficulty determining whether or not it will be cost effective given there is no standard threshold for trigger payments. This notwithstanding, the current payment scheme is more cost effective than the $500 million the Bangladesh government spends annually on natural disaster payments and relief. Thus, programs such as these may prevent more internal and external migration out of low-lying coastal areas as natural disasters become more prevalent and threaten human livelihood.

In 2015, the monsoon season displaced 850,000 individuals in Pakistan and 1.8 million in India. With ever increasing shifts in climate patterns contributing to intense precipitation events in tropical regions, future extreme flooding has the potential to act as a regular driver of human migration. Bangladesh, with its population of over 150 million and vulnerability to the effects of global warming, will be on the front lines of environmental change. Massive population displacement and migration into urban areas due to natural disaster, loss of human habitability and economic productivity are not long-term strategies. Although natural disaster events and degradation will almost certainly influence individuals to seek opportunity outside of coastal zones, populations can still be somewhat retained by helping these communities adapt to this new normal. Thankfully, the Bangladesh government is leading its South Asia peers by allowing the implementation of programs such as the meso-level flood insurance as a way to form a comprehensive strategy to retain populations and agricultural production along its coasts.