Adaptive Policymaking for Agriculture, Water Resources

and Climate Change

Designing Policies that can Adapt to

a World of Uncertainty, Change and Surprise

COP 11, Montreal

9 December 2005

Why Study Adaptive Polices?

Climate Phenomena Climate Impact Higher Maximum Temperature (very likely)

increased heat stress in livestock increased risk of damage to a

number of crops

Higher Minimum Temperatures (very likely)

decreased risk of damage to a number of crops and increased risk to others

extended range of some pest and disease vectors

More Intense Precipitation Events (very likely)

increased flood, landslide and mudslide damage

increased soil erosion Increased Tropical Cyclone intensity (likely - over some areas)

increased risks to human life, risk of infectious disease epidemics, many others

increase damage go coastal ecosystems such as coral reefs and mangroves

Increased Droughts and Floods associated with El Nino events (likely - over some areas)

decreased agricultural and rangeland productivity in drought and flood-prone regions

Increased Asian Monsoon Variability (likely)

increased flood and drought magnitude and damages

The world’s poor are most heavily dependant on agro-ecological services, and most vulnerable to deteriorating environmental conditions, worsened but not necessarily created by climate change [IPCC, 2001].

Key point: critical impacts and vulnerabilities are in agriculture and water resources

The details are, however, unknowable: global and regional perspectives

The Need: recent IDRC research [Moench et al, 2003]

“When situations are characterized by variability, uncertainty and change, conventional planning scenarios provide little guidance regarding future needs and conditions.”

“Specific solutions are less important than the existence of processes and frameworks that enable solutions to be identified and implemented as specific constraints and contexts change.”

Civil aviation policy of Netherlands: expansion of Schiphol airport

“If we were able to predict the future accurately, preferred policies could be identified in principle by simply examining the future that would follow from the implementation of each possible policy.”

Project Research Premise

the adaptive capacity and resilience of communities is a critical aspect in the transition to sustainable development…

and one of the important factors in building adaptive and resilient communities is for the public policies, which influence the behaviour of communities, to themselves be adaptive and resilient to uncertainty, change and surprise.

Research Hypothesis

Policies and instruments that are adaptive have specific characteristics and mechanisms that make them adaptive

These characteristics and mechanisms are poorly understood at

both a practical and theoretical level.

Project Goal

To advance the understanding of adaptive policies and policy instruments to help government agriculture and water resource policymakers at the local, state and federal levels to design adaptive policies – policies that have the following characteristics:

Robustness - the ability to be effective under a range of anticipated conditions.

Adaptability - the ability of a policy instrument to respond well to unanticipated circumstances and longer-term change.

Adapted from Walker, W.E., S.A. Rahman, and J. Cave 2001. Adaptive policies, policy analysis, and policy-making. European Journal of Operational Research 128: 282-289.

Our Current Conceptual ThinkingRules and Delivery

Idealized illustration of policy design and implementation

Policy Implementatio

n

InstrumentDesign

Monitoring, Evaluation

& Improvemen

t

Understanding

the Issue

ObjectiveSetting

Instrument Rules

Policy Design

Learning & Improveme

nt

Staff Trainin

g

Operation

Instrument Delivery

Delivery System

Development

Monitoring &

Evaluation

Adaptability Via Monitoring, Learning and Improvement

Stage Setting

Assembling a Basic Policy

Others’ actionsUnforeseen eventsChanging preferences

Vulnerabilities

Signposts

Mitigating actions

Hedging actions

Reassessment

Corrective actions

Defensive actions

Triggers

Certain

Uncertain

from Walker, W.E., S.A. Rahman, and J. Cave 2001. Adaptive policies, policy analysis, and policy-making. European Journal of Operational Research 128: 282-289.

Walker et al. (2001)

Adaptability Via Defining CharacteristicsExamples:

Ensure that social capital remains intact (Ruitenbeek and Cartier 2001).

Create opportunity for self-organisation and build networks of reciprocal interaction that foster trust and cooperation (Berkes et al. 2003; Glouberman et al. 2003; Axelrod and Cohen 2000)

Promote variation and redundancy (Berkes et al.; Glouberman et al.)

Combine experiential and experimental knowledge (Berkes et al.)

Insights from Case Study Research – Canada’s Crow Rate

1897

Crow Rates terminated and replaced with

Western Grain Transportation Act

1984

Western Grain Transportation Act terminated

1996 20011919

Crow’s Nest Pass Act

1903

Manitoba Government Requests Change:

War Measures Act Suspends Crow Rates

1922 1925

Crow Rtes put into Railway Act as “statutory grain rates”

19611927

Crow Rates extended to westbound export grain shipped to west coast

Crow Rates extended to rapeseed and flaxseed.

Crow Rates Restored for Grain and Flour

Lower than anticipated inflation since

Temporary maximum freight rate period ends

All producer payments completed

Inflationary period due to pressures

of First World War

Substantial drop in grain prices

War time price controls lifted

Period of revenue loss for railways sparks a chain of studies to understand the issue

1946

Sources: Excerpts from Rothstein (1989); Earl (1996); Schmitz et al. 2002)

Insights from Case Study Research – Canada’s Crow Rate

Adaptability

(the capability to recognize a significant change in conditions, interpret and learn from the information, and make necessary changes)

Robustness

(capability to deal with a range of circumstances

through discretion)

High Flexibility

Low Flexibility

1897-1925

1925-1984

1984-1996

India Case Study Research – Background

Vulnerability of Indian agriculture to climate change Poor insurance penetration - informal sector excluded Rural credit – indebtedness – poverty

Variation during 1960-82 of (a) rice yield over the Indian region (b) total food grain production (c) all-India rainfall (Source: Gadgil 1996)

Insights from India case study research: Evolution of crop insurance

Farm income insurance scheme

19791972

Weather indexed insurance

1999

National agriculture insurance scheme

2003 20041984

Experimental individual scheme

1985

Pilot crop insurance scheme

Insurance linked to short-term credit2% premium, subsidy for small farmersBasic rainfed foodgrains covered

IRDA Act

Entry of private and foreign players

Green Revolution

Very poor coverage of farmersVery low premium to claims ratio

MFIs, SHGs, village internet kiosks

1978

Comprehensive crop insurance scheme

1997/8

Experimental crop insurance scheme

AIC takes over from GIC

Coverage and financial viability still an issue

Economic reforms

For wheat and paddyTo replace NAIS

2001

Working group for Xth Plan

1991

High level task force

Higher premiums (subsidy for small farmers to be phased out)Option of higher risk for higher premiumExtended to non-loanee farmersCommercial crops included

Insights from India case study research

Crop insurance robust by definition: helps deal with range of weather conditions Problems: coverage, financial viability, adverse selection Long delays in payment of claims Small and marginal farmers lose out

Weather indexed insurance MORE robust Minimizes adverse selection No need to draw up and monitor individual contracts Protects overall income rather than yield of specific crop Improves farmers’ risk profile and access to bank credit Quick payouts can improve recovery times Important role for micro finance institutions Need for institutional backing

Adaptability Periodic review and improvement of crop insurance Weather insurance learning from pilot schemes

Future Activities

Community-level research Conducted in India by TERI and

Canada by IISD To identify the characteristics and

mechanisms of policy instruments that can adapt to surprises and longer-term changes

Synthesis Paper No.1 (available April 2006).

Project Website and Contact Information

www.iisd.org/climate/canada/adaptive_policy.asp

Preety Bhandari

The Energy and Resources Institute

preetyb@teri.res.in

Stephan Barg

International Institute for Sustainable Development sbarg@iisd.ca