Drought in West Africa: How CHIRPS and Reference Evapotranspiration can be used for Index Insurance in a Non-Stationary Setting

Index insurance is increasingly used as a safety net and productivity tool in order to improve the resilience of small-holder farmers in developing countries. In West Africa, there are already index insurance projects in many countries, and various non-governmental organizations are eager to expand implementation of this risk management tool. Often, index insurance payouts rely on rainfall to determine drought years, but designation of years based on precipitation variations is particularly complex in places like West Africa where precipitation is subject to much natural variability across timescales [Giannini 2003, among others]. Furthermore, farmers must also rely on other weather factors for good crop yields, such as the availability of moisture for their plants to absorb and maximum daily temperatures staying within an acceptable range for the crops. In this presentation, the payouts of an index based on rainfall (as measured by the Climate Hazards Group Infrared Precipitation with Stations {CHIRPS} dataset) is compared to the payouts of an index using reference evapotranspiration data (using the ASCE's Penmen-Monteith formula and MERRA-2 drivers). The West African rainfall index exhibits a fair amount of long-term variability, reflective of the Atlantic Multidecadal Oscillation, but the reference evapotranspiration index shows different variability, through changes in radiative forcing and temperatures. Therefore, the use of rainfall for an index is appropriate for capturing rainfall deficits, but reference evapotranspiration may also be an appropriate addition to an index or as a stand-alone index for capturing crop stress. In summary, the results point to farmer input as an invaluable source of knowledge in determining the most appropriate dataset as an index for crop insurance. Alessandra Giannini, R Saravanan, and P Chang. Oceanic forcing of Sahel rainfall on interannual to interdecadal time scales. Science, 302(5647):1027-1030, 2003.