Can we assess and quantify the possible impacts of climate change on crop yields? Are backward-looking views still representative in a warmer world? How shall the crop re/insurance industry react to the changing environment?
In a world where the Paris Agreement climate targets need to be achieved, our research attempts to answer these questions through the lenses of crop re/insurance. State-of-the-art crop growth models are used to translate a range of physically plausible, forward-looking climate scenarios into crop yield outcomes in Europe. The approach enables the quantification of climate-related changes in the frequency and severity of yield distributions caused by the jump from the 1.0°C to 1.5°C level of global warming above pre-industrial levels.
The findings of this report show significant climate impacts on crop yields in Europe even if CO2 neutrality and global temperature stabilization to 1.5°C are achieved, thus stressing the urgency for stringent reductions in greenhouse gas emissions and more rapid advances in energy transition. Furthermore, the results imply that in a changing climate, elementary risk management tools - like insurance - are becoming more and more relevant. This research also provides quantitative evidence to challenge the representativeness of yield distributions generally used by the industry in costing crop re/insurance products and that they likely tend to underestimate risks.
We propose targeted calls-to-action for agri re/insurers that can
- help proactively manage climate risks in agriculture,
- improve actual vs expected loss ratios and portfolio performance and
- strengthen the security and resilience of the food system.
Finally, the report acknowledges the role of the re/insurance industry in supporting agricultural adaptation strategies that have the potential to partially mitigate climate-driven crop yield losses.
Source - www.swissre.com