This chapter summarises the findings and recommendations of Managing Weather-Related Disasters in Southeast Asian Agriculture. It emphasises the need for the reviewed countries to improve their disaster risk management institutions, and to strengthen their prevention and mitigation policies to reduce agriculture’s risks to weather-related disasters. It then outlines recommendations to improve preparedness, crisis management and recovery measures in these four countries and identifies three priority actions in each country.
Managing Weather-Related Disasters in Southeast Asian Agriculture
Report
OECD Studies on Water
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Chapter 1. Overview and policy recommendations
Abstract
The exposure of Southeast Asia to increasingly frequent and intense weather-related disasters is a growing concern for agricultural producers. According to the latest reports of the Global Climate Risk Index (2017), four member countries of the Association of Southeast Asian Nations (ASEAN) currently rank among the most affected countries worldwide in terms of the impact of past extreme weather events: Myanmar (2nd worldwide), the Philippines (4th in 2016 and 5th in 2017), Viet Nam (7th in 2016 and 8th in 2017), and Thailand (9th in 2016 and 10th in 2017). In the past 20 years, the Philippines, Viet Nam and Thailand have all suffered more than one catastrophic flood, while Myanmar had a 95% probability of being hit by a disastrous flood. These weather-related disasters have had catastrophic impacts on agriculture, posing a threat to the region's food security and further development potential.
As many ASEAN countries strive to meet national objectives of increasing agricultural productivity and production in the coming years, strengthening resilience will be key. While trade-offs may exist in the short term, a careful assessment of policy implications for productivity and resilience will reveal that investment in resilience will generate productivity payoffs in the long-term.
This report reviews policy approaches to droughts, floods and tropical storms in selected Association of Southeast Asian Nations (ASEAN) countries (Myanmar, the Philippines, Thailand and Viet Nam) in an effort to identify good practices and strengthen the resilience of the agricultural sector across the region. Chapter 2 builds the case for improved disaster risk management against droughts, floods and tropical storms in Southeast Asia. Chapter 3 then provides evidence of the high risk exposure of the agricultural sector in the region to these weather-related disasters. Finally, Chapter 4 reviews the policies in place in the selected ASEAN countries to manage risks to agriculture from weather-related disasters. In particular, policy instruments across the risk management spectrum – (i) prevention and mitigation, (ii) preparedness, (iii) response and (iv) recovery – are discussed and assessed using the benchmark of OECD recommendations and guidelines, in particular the OECD framework developed from policy lessons and approaches to mitigate droughts and floods in agriculture. Based on these elements, the report draws a number of conclusions and policy recommendations for ASEAN countries and the ASEAN Secretariat, which are summarised in this chapter.
1.1. Improving disaster risk management institutions to limit damages and losses from weather-related disasters in ASEAN countries’ agricultural sector
ASEAN countries have set up regulatory frameworks and institutional settings for disaster risk management (DRM) according to international recommendations and good practices. The ministries and institutions in charge of agriculture are actively involved in this set up. However, to date the policy emphasis has been mainly placed on coping with, and recovering from disasters, rather than preventing, mitigating and preparing for future disasters. Improvements to inter-ministerial co‑ordination could also be made. DRM is largely implemented top-down: instructions are developed at the national level and carried-out at the local level. ASEAN countries should consider providing local governments with resources and capacity to enable them to implement DRM measures that are pertinent to their specific situation; this would support integration of different policy instruments in locally appropriate policy packages and facilitate collaboration between different local administrations involved in DRM.
Strengthen disaster risk reduction planning. Co‑ordinated strategic thinking between all government departments and partner institutions involved in DRM should help reduce the sector’s risk exposure, thus reducing the cost of response and recovery measures.
Improve the communication channels between government departments involved in DRM. This will allow better co‑ordination in planning to translate into better co‑ordination when responding to disasters.
1.2. Enhancing prevention and mitigation policy instruments to reach OECD good practices
While ASEAN risk management efforts have focused primarily on response and recovery efforts, the four countries studied have taken preliminary steps to reduce their risk exposure. According to OECD policy lessons on mitigating the risk of droughts and floods to agriculture, key prevention and mitigation measures include: (i) strengthening the resilience of water-related infrastructure projects; (ii) aligning regulations; (iii) increasing farmer awareness; (iv) aligning economic incentives to reduce vulnerability; and (v) designing insurance policies to encourage resilience.
Large water infrastructure projects are a priority for government spending in the region to reach agricultural production objectives. The water infrastructure in many ASEAN countries has contributed to expand the land coverage of rice production, but is not as well suited to deal with a changing climate, and more frequent and intense weather-related disasters. Infrastructure projects are centrally planned with little consultation of local stakeholders. Their planning is only starting to account for their associated environmental costs and benefits in line with the higher risk of weather-related disasters and other objectives of longer-term sustainability. What is more, their production objective is not coherent with mitigating the impacts of extreme-weather events on the agricultural sector as irrigated farmers might be encouraged to grow water-thirsty crops like rice in areas that are not naturally suited for these crops, but where it has been made possible by irrigation development.
Undertake wide stakeholder consultations and include environmental cost‑benefit and risk assessments for water infrastructure projects. Planning for new water infrastructure or refurbishing existing ones should follow standard international recommendations, including an environmental risk assessment to address the increased risk of climate change and weather-related disasters. It should ideally involve the local stakeholders and users to adjust the infrastructure to the needs of the local territory and its communities. To improve the sustainability of these projects, investments should be coupled with a higher charge to users benefiting from the infrastructure to recoup some of the investment costs and at least reflects the actual costs of maintenance.
Reconsider the objective of expanding actual irrigated land area and concentrate on improving the water efficiency of current irrigation infrastructure to save water resources. For land that is not yet irrigated, and based on the findings of an environmental cost-benefit analysis of new infrastructure, governments should consider the less costly policy option of extending technical innovations to farmers that allow them to produce non-traditional commodities to ensure their income and food security.
Awareness among Southeast Asian farmers of practices to reduce risk exposure is low, and the technical advice offered to them on how to strengthen resilience is variable. While extension services are encouraging crop diversification in many countries, other on-farm practices to strengthen resilience – such as the adoption of resistant seed varieties and effective water management – are less widely promoted. This is due in part to the variable quality of extension advice, which depends on the capacity of the local extension agent, the level of remoteness of the farming community, and on the civil society and agribusiness networks that can help transfer knowledge and information. In some cases, it is also driven by a limited resilience focus for research and development, although many on-farm practices and tools that increase resilience could be disseminated without further research.
Mainstream disaster risk management in ASEAN countries' agricultural extension curricula. Existing technical assistance programmes should provide information about farmer's risk exposure and affordable on-farm strategies to reduce it. Such strategies could include crop diversification, but should also extend to farm practices such as harvesting rainwater in drought-prone regions and natural flood barriers in flood-prone regions. In the more remote areas where extension officers are sparse and communication networks patchy, collaboration with international development partners and local innovation systems would help disseminate information about risk exposure and agricultural innovations to isolated farmers.
Measure farmer awareness about risk exposure and risk management. Statistical departments in ASEAN countries should collaborate to add one or two questions in regular agricultural surveys to gather data that can be compared across countries related to farmers' understanding of how their practices affect their resilience. This information would help improve the monitoring of the impact of extension services on farmers' awareness of climate-risky practices.1
ASEAN countries can strengthen policies and regulations to improve collective and individual use of water in the agricultural sector. At present, there are only a few mechanisms to allocate water rights and regulate water use. To regulate water volume use, the ASEAN countries studied rely mainly on less effective land zoning measures and the promotion of specific crops adapted to the current climatic situation in a given agro‑ecological setting by farmers, rather than limiting their water use with more direct policy instruments.
Adjust the regulatory framework to steer towards more efficient use of water resources by the agricultural sector. A comprehensive and coherent set of policies could include some of the following: allocate water use rights to individual or collective users; develop water use restriction measures to be implemented in times of crisis; allow water rights to be auctioned and transferred.
Invest in water meters. Better water meters would gather better evidence to elaborate policy instruments that regulate water use more directly than would zoning and farm practice suggestions. Given their limited financial resources, ASEAN countries should collaborate with the private sector and the international development community to co‑finance investments in water use measurement tools.
Although several economic incentives that encourage resilience exist (e.g. preferential credit for efficient irrigation schemes), many agricultural support measures in Southeast Asia counter these policies and increase farmers’ vulnerability to weather-related disasters. Market price support measures (such as import restrictions and minimum prices), preferential insurance subsidies, and concessional loan terms for rice farmers are of particular concern.
Reduce economic incentives that increase vulnerability. Market price support measures and preferential subsidies should be removed to avoid encouraging farmers towards agricultural products that are not resilient in local conditions. Water pricing schemes should be revised to reflect the full cost of water delivery and should be accompanied by resource-decoupled compensation, where appropriate and applicable. Such reforms would help reduce overuse of water in drought-prone regions. If governments must take the decision to restrict water extraction in times of extreme drought or to flood agricultural land to protect the economic interests and assets of other sectors of the economy, farmers should be adequately compensated for their losses.
Government-sponsored agricultural insurance exists in some Southeast Asian countries in the absence of private sector provision. It usually covers various weather-related disasters for the main commodities grown, but current policies limit resilience due to design flaws and a focus on water-thirsty crops. The Philippines and Thailand are more advanced and offer indemnity-based policies for selected agricultural products. Although both schemes offer advantages, they also have design constraints that limit the potential benefits in terms of risk reduction and risk transfer. Myanmar and Viet Nam have yet to develop agricultural insurance products at the national scale, although several pilot projects have been initiated.
Develop cost-effective insurance programmes for catastrophic risks that provide pay-outs in a timely manner. Hybrid insurance products, for example, are appropriate in many contexts as they can include: (i) an index-linked partial pay-out (triggered by shocks recorded at an aggregate level) to help farmers face immediate costs after a disaster; and (ii) an indemnity component based on losses recorded at the farm level. The index component helps to reduce administrative costs for the government and provides quick support to farmers, while the indemnity component ensures that the pay-out more closely reflects the losses suffered by farmers.
Price the programme so that it ensures adequate take-up levels, but creates minimal distortions to farmer incentives to invest in resilient practices. The experience of government-provided crop insurance is that subsidies are needed to increase take-up among farmers with financial constraints. However, these subsidies should be structured in a way that does not increase vulnerability by distorting farmer incentives to reduce risk. For instance, subsidies should not be limited to specific crops, as this may discourage farmers from planting more resilient alternatives.
Couple insurance with educational programmes about how the policy works. Capacity development should allow farmers to better understand which risks are covered and which are not, helping them adopt strategies to reduce their risk exposure. Such information campaigns would also help to encourage take-up.
1.3. Efforts to strengthen institutional and household preparedness are starting to bear fruit
Many ASEAN countries have taken an important first step in preparedness by developing efficient weather and hydrological information systems. As is the case for extension services, getting relevant and timely information on incoming weather-related disasters to individual farmers in all areas that could be affected continues to be a challenge. To improve the preparedness of farm households to incoming weather-related disasters, the ASEAN countries under study are improving the coverage of their weather and water information systems. However, a gap remains in terms of conveying relevant and timely hydrometeorological information to the farmers.
Improve communication between the system and farmers. ASEAN countries should improve the information and communication tools and processes to ensure hydrometeorological information is effectively conveyed to the end users: individual farmers. A particular effort will be needed to extend coverage of the information system in remote rural areas.
Continue investing in hydrometeorological information systems. ASEAN countries should continue their combined technical collaboration, as well as collaborate with the international development community, to improve and invest in measurement equipment, data management systems, and local innovation networks. This would provide reliable information to policy makers as they develop policy, to insurance providers and markets that assess farmer risk, as well as to farmers and rural communities thus allowing them to strengthen their resilience to weather-related shocks. Given the limited financial resources of ASEAN countries, their governments should seek co‑financing from the private sector and concessional loans from the international development community.
A preparedness measure at the household level – precautionary savings –helps wealthier farmers to manage risk in Southeast Asia. Given low and volatile income levels in many ASEAN countries, the majority of smallholder farmers do not have access to precautionary savings. However, among farmers with higher incomes, savings are commonly set aside to prepare for emergencies such as weather-related disasters. Most farmers keep their savings at home, but the use of formal savings accounts is increasing.
Encourage precautionary savings in formal settings. The use of formal savings mechanisms should continue to be encouraged across the ASEAN region; for example, by coupling access to credit and other financial services to the opening of a savings account. It is important to note that subsidies initially needed to encourage farmer take-up of insurance products might incentivise lower precautionary savings, pointing to the importance of co‑ordinating the various financial incentives and support products available to farmers to help them manage their risk.
1.4. Adapting to and learning from high frequency weather-related disasters to manage crises in the ASEAN region
Many ASEAN countries have aligned their crisis management procedures with international best practice guidelines. Thanks to the regulatory frameworks and institutions in place, ASEAN countries can respond to a crisis, and provide emergency relief for farmers and rural areas to cope with a disaster. However, the lack of co‑ordination between different governmental services at the national and local levels can create hurdles to prompt government response to disasters. Additional evidence gathered from some of the countries studied points to the need for better functioning government procurement systems to buy the necessary equipment and first-necessity products in large quantities and to cope with inflows of funds from international development partners, with adjoining procurement rules and regulations.
Improve the co‑ordination mechanisms between governmental departments and local authorities to allow more fluid response to crisis at local level. The devolution efforts concerning powers, budgets and human resources witnessed in the Philippines, Thailand and Viet Nam are probably an appropriate solution to improve local response capacity. However, better governance and co‑ordination between local units of the line ministries is needed to allow this devolution process to bear fruit for rapid disaster response.
Streamline governmental procurement systems. Governments in the ASEAN countries under study are the first point of call to respond to a disaster. They are therefore expected to have the appropriate systems allowing them to procure and distribute emergency goods and equipment. More efficient government procurement systems would allow them to respond more rapidly to disasters and make a better use of the technical and financial support often proposed by the international development community when disasters hit.
Disaster-linked cash transfer programmes, a second tool supporting the response phase, are already employed in some Southeast Asian countries but many of these programmes are slow to make disbursements and costly for the government. In some countries, loss assessments are undertaken for each farm, which slows the disbursement process and inflates programme costs. In certain countries, all farmers are eligible regardless of farm size and income levels; this is problematic as it may actually increase risk-taking among wealthier farmers that have other forms of insurance. It also increases costs for governments, which are likely to persist in the long term: offering disaster-linked transfers to all farms fosters an attitude of dependence and reducing recourse by larger farms to insurance due to their expectation of support.
Design disaster-linked cash transfers to offer quick, targeted and cost-effective support to low-income farmers. As take-up of agricultural insurance products tends to be very limited among low-income households, disaster-linked cash transfer programmes should be designed to fill this gap in financial coverage. By collecting satellite data of agricultural losses, such programmes can disburse quick payments via mobile banking and ensure that beneficiaries (farmers whose income is too low to afford the purchase of insurance covering weather disaster risk) receive a cash transfer within a few weeks after a disaster. In order to reduce the financial burden on the government and societal expectation that the government will step in for all farmers, such a programme should be limited to support low-income farmers who cannot afford insurance products.
1.5. Extending recovery measures beyond pre-disaster conditions and building resilience against future disasters
In terms of post-disaster recovery by the agricultural sector, the countries studied have the mechanisms to allow agricultural inputs and equipment to be distributed following a disaster. The majority of countries studied have set up a national reserve, sometimes relayed by regional or provincial reserves, of relevant equipment and farm inputs that are needed to help farmers recover quickly from a disaster. However, some administrations could improve their procurement procedures to allow timely spending of the funds allocated to respond to the disaster.
Make complementary use of a national reserve, local and international markets to source inputs and equipment for recovery after a disaster. Such reserves are useful mechanisms for rapid deployment of essential farm inputs to prepare a new planting season or to sustain livestock numbers. However, given the improving transport infrastructure in many ASEAN countries, and the increasing market integration between ASEAN countries and their regional partners, it is worth exploring the possibilities that local, regional and international markets might bring to source inputs and equipment more efficiently than would a national reserve mechanism.
The four countries studied frequently resort to debt rescheduling, a common financial tool to aid the recovery process. In some countries, loan interest can be written off for certain programmes, which may encourage high-risk investments and thus increase vulnerability. However, formal savings accounts are still not widely used, which limits the scope of this policy measure to wealthier farmers with formal loans.
Design debt rescheduling measures to encourage resilience through clear conditions and limited scope. Agricultural loans should include clear conditions under which debt is rescheduled. This provides farmers with a limited, implicit “insurance” against catastrophic risks and enables them to make productive investments. At the same time, such rescheduling terms should be conservative and avoid write-offs of debt, whether it concerns the interest or principal. Governments should align current public loan programmes with such standards and introduce regulation to ensure private loans also comply.
More fundamentally, recovery measures are essentially geared to helping the agricultural sector get back to the situation where it was before the disaster struck. Recovery measures are not fostering the institutional and structural changes needed to make agriculture more resilient to future disasters.
Take a longer-term view towards improving agriculture's resilience to frequent disasters. With the help of international organisations specialised in policy analysis and reform, ASEAN countries and the ASEAN Secretariat should elaborate policy instruments to help steer the agriculture sector to better prepare for future weather-related disasters. In the event of a disaster, once immediate emergency needs have been attended to, governments should review the lessons learned from their past response and review the checklist of policy approaches for disaster prevention, mitigation and preparedness to help the sector be better prepared for a future weather-related disaster. This closes the loop of the DRM cycle, as recommended by international good practices.
1.6. Country-specific priority actions
This report has identified a current state of policy measures on DRM in general, and on tackling the risk to agriculture from droughts, floods and tropical storms in particular, in Myanmar, the Philippines, Thailand and Viet Nam. Given the evidence gathered, the governments of these countries could consider taking the following priority actions to bring their agricultural risk management systems in line with OECD and international good practices. Several recommendations are similar because the countries face similar gaps in their policy environment.
Myanmar
Mainstream disaster risk management into existing agricultural extension initiatives by exploring innovative, low-cost tools that reach farmers with risk management advice.
Given that most of the country's water dams, dykes and irrigation perimeters were established many years ago, review the calibration of all major water infrastructures to take account of the increased frequency and larger potential impact of future weather-related disasters.
Explore opportunities to build on existing cash transfer mechanisms by including a disaster-linked component that issues timely payments after extreme events. Collaborate with experts in the international development community to ensure that such a programme is carefully targeted and designed to strengthen resilience of low-income farmers.
Philippines
Mainstream disaster risk management into existing agricultural extension initiatives by exploring innovative, low-cost tools to reach farmers with risk management advice.
Given the localised nature of floods and typhoons affecting the country, agree on specific local DRM objectives with Local Government Units to encourage the effective devolution of DRM to the administrative level that will be best placed to prevent and respond to these risks.
Given the distortive effect of current market price support measures on rice production, review existing policies currently favouring rice to allow more resilient crops to be chosen by farmers according to their local market and agro‑ecological conditions.
Thailand
Mainstream disaster risk management into existing agricultural extension initiatives by exploring innovative, low-cost tools to reach farmers with risk management advice.
Promote efficient water use through carefully-designed water pricing measures: charge farmers' use of irrigation and groundwater at a rate that reflects the costs of investment in infrastructure and delivery of this essential natural resource to encourage efficient usage.
Given the distortive effect of current market price support measures on rice production, review existing policies currently favouring rice to allow more resilient crops to be chosen by farmers according to their local market and agro‑ecological conditions.
Viet Nam
Mainstream disaster risk management into existing agricultural extension initiatives by exploring innovative, low-cost tools to reach farmers with risk management advice.
Promote efficient water use through carefully-designed water pricing measures: charge farmers' use of irrigation and groundwater at a rate that reflects the costs of investment in infrastructure and delivery of this essential natural resource to encourage efficient usage.
Given the distortive effects of commodity-specific policies, refrain from applying policies favouring rice to allow more resilient crops to be chosen by farmers according to their local market and agro-ecological conditions.
Reference
LSMS (2017) “Viet Nam household living standards survey 2004”, Living Standards Measurement Survey website, http://iresearch.worldbank.org/lsms/lsmssurveyFinder.htm (accessed 24 May 2017).
Note
← 1. In the World Bank's Living Standards Measurement Study survey for Viet Nam, the sections 9.4.5 on the reasons for changing cropping structures and 9.4.6 on access to agricultural promotion services provide examples of relevant questions that can help measure progress in farmer awareness to weather-related risk (LSMS, 2017).