The Challenge

Climate change is intensifying extreme weather events globally, creating barriers that trap vulnerable farming communities in cycles of poverty and food insecurity. Smallholder farmers in low-and middle-income countries face two critical challenges: unreliable information about future weather conditions preventing them from making informed decisions and an absence of affordable insurance to mitigate losses during weather shocks. For instance, Bolivia’s Valles Macro-region of the Central Andes is experiencing increasingly erratic rainfall patterns and increasing temperatures. Moreover, the region has just 220 weather stations covering 83,380 square kilometers—well below recommendations—and 35.2 percent of households living in poverty. As such, if not addressed, the negative economic and livelihood impacts of climate change may continue to persist and even worsen.

Given these significant and overlapping challenges, innovative solutions may be necessary to help farmers comprehensively improve their resilience to climate shocks. Researchers focus on two such solutions: early warning systems and index insurance. These policies have become popular among both researchers and policymakers as potential tools for climate adaptation.

The Study

In partnership with the climate insurance enterprise Suyana, researchers are conducting a pilot study in Bolivia to explore whether early warning systems and climate insurance can improve agricultural decision-making and resilience among smallholder farmers facing increasingly severe climate risks.

The early warning system being developed by Suyana uses machine learning to downscale weather forecasts to a 1-kilometer resolution (compared to typical 20-kilometer grids), providing hyper-local soil moisture predictions. Meanwhile, the index-based climate insurance offers anticipatory payments during the growing season rather than traditional post-harvest payouts.

The study involves 536 farmers in 67 communities in the Valles Macro-region of the Central Andes. To understand farmers’ decision-making and how the Early Warning System and climate insurance can be most effective, researchers will:

• Document how farmers currently cope with climate risk in these vulnerable areas. 
• Evaluate farmers’ beliefs about weather forecasting and how they expect EWS might shape their adaptation to environmental risk.
• Measure the value of insurance payouts at different times to shed light on insurance design.
• Analyze farmers’ willingness to pay for index insurance and information services, conducted alongside risk aversion measurements to understand how these factors interact.
• Measure whom farmers would like to learn from about climate technologies, randomizing which conversations take place, and observing impacts on knowledge and demand to identify the most effective channels for technology dissemination.

The results will inform a full-scale randomized evaluation to shed light on whether early warning systems and climate insurance are more effective separately or together to improve climate resilience for vulnerable farming households.

Results

Results will be available in 2026.

Sources

1.  Bolivia Instituto Nacional de Estadística, “Pobreza y Desigualdad,” Accessed March 3, 2026, https://www.ine.gob.bo/index.php/estadisticas-economicas/encuestas-de-hogares/

Implementing Partner