This is not news in the world of impact measurement and monitoring where all gets down to materiality of data, replicability of results, and critical importance of local context. A mix of quantitative and qualitative indicators is often what is required in assessing local needs and regional specificities especially when we aim at using data to inform future investment decisions.

Whilst climate change is considered a global issue, its impacts are felt by local people and ecosystems. To truly understand the level of impact, access to local data is key to prepare the selected communities, economic activities and sectors for the level of adaptation required and the extent to which climate-related impacts are already being felt.

COP27 marked a historic agreement to establish and operationalise a loss and damage fund to assist developing countries, who are particularly vulnerable to the effects of climate change, with the costs associated losses from extreme weather events. Over the same week, the V20 and G7 launched the Global Shield Initiative, a financing facility to provide pre-arranged finance to distribute before disasters happen – providing protection to vulnerable nations to lessen the impact of disasters and build resiliency. Both these new initiatives have a major similarity; they are linked to changing and exacerbated weather conditions.

This marks a great step forward in climate justice, but concerns remain that a lack of weather data across Africa could inhibit nation’s ability to apply for loss and damage funding.(1) This inability comes from a lack of weather monitoring stations to prove that a certain disaster was caused by climate change; and could dramatically affect the distribution of loss and damage funding if became a compensation requirement.

To assess current and forecast future weather-related events in a specific area two components are required: the number of observations recorded within a region to make a finding valid and the period over which these are recorded. This is why weather stations have a key role to play in recording weather conditions. Tracking whether a change of weather conditions has occurred over time, is central to the definition of a sustained climatic change. A final addition is the timeliness in which data is transmitted to central stations; whilst not integral to the assessment, it limits the ability for early warning signals and loss and damage consequences being potentially reduced.

Our experience in India, where some states have as many as 240 million people, is that timely access to state-specific data can really make a difference in building resilience to climate change for the most affected groups. One of the investees of the BlueOrchard managed InsuResilience Investment strategy is Skymet Weather Services Private Ltd. Skymet has benefited from private equity financing and technical assistance provided by the strategy which was initiated by the German Development bank (KfW) acting on behalf of the German Ministry of Economic Cooperation and Development.

What Skymet does is “simple”. It provides weather and crop-yield related information services to the insurance sector in India via more than 4,000 automatic weather stations across the country. Our investment helped Skymet to expand its network of stations and national coverage, as well as to secure new contracts in both weather data and crop yield measurement. Skymet now reaches more than 20,000,000 farmers, allowing them to better manage the impact of climate and weather events on harvests through smartphone-available, index-based, livestock and crop insurance.

What this allows to protect is not only crops but also the livelihood of entire communities of small-holder farmers by providing them access to affordable climate insurance.

A lack of weather stations, and in turn sparse climate data, is a particular issue within Africa. Africa has the least developed land-based weather observations network in the world, with only one eighth of the minimum amount needed by the World Meteorological Organisation. Added to this, the recent Bloomberg report’s on the further closure of existing weather stations, with only 22% of current stations up to quality standards; all further limiting Africa’s climate assessment and capacity to be resilient and adapt to the impacts of climate change.

A lack of weather stations inhibits Africa’s climate ability on multiple fronts:

  • From an adaptation perspective, a lack of weather stations prohibits a country’s ability to warn communities of current weather extreme events, along with planning for the level of adaptation needed for future climate change.
  • Africa is dependent on natural ecosystems, with over 70% of the population dependent on agriculture, a lack of weather data, prevents farmers from understanding changing seasons, growth optimisation of crops and the overall efficiency of their production.
  • Interestingly, it touches on mitigation to the same extent, through, for example, a lack of understanding on wind or river patterns, prolonging a country’s ability to construct renewable energy projects (among other barriers) due to a lack of understanding on the dependency of the power source.
  • To build a functioning insurance market that has a pivotal role to play in facilitating mitigation and adaptation to natural catastrophes, including climate change. When suitably applied, insurance can become a crucial instrument to prepare for and withstand adverse events.

Loss and damage and adaptation have been key discussions topics at COP27, predominately focused around assessing risks and therefore being able to properly price required financing and insurance instruments. Whilst many can quantify the level of exposure they have or approximate the total predicted impact; African countries even start conversations on a different foot, unable to communicate on the same level, quantitatively, whilst already feeling the effects of climate change the most. Weather stations and increased data are not only needed to combat climate change but are also a key pillar for future socio-economic growth and needs to move to the forefront of the agenda in Africa.

(1) Source: https://www.researchgate.net/figure/The-global-network-of-World-Weather-Watch-WWW-stations-are-color-coded-to-show_fig1_43155199

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About BlueOrchard Finance Ltd
BlueOrchard is a leading global impact investment manager and member of the Schroders Group. As a pioneering impact investor, the firm is dedicated to generating lasting positive impact for communities and the environment, while aiming at providing attractive returns to investors. BlueOrchard was founded in 2001, by initiative of the UN, as the first commercial manager of microfinance debt investments worldwide. Today, the firm offers impact investment solutions across asset classes, connecting millions of entrepreneurs in emerging and frontier markets with investors with the aim to make impact investment solutions accessible to all and to advance the conscious use of capital. Being a professional investment manager and expert in innovative blended finance mandates, BlueOrchard has a sophisticated international investor base and is a trusted partner of leading global development finance institutions. To date, BlueOrchard has invested over USD 10 billion across more than 105 countries. Over 260 million underserved people and MSMEs in emerging and frontier markets received access to financial and related services with the support of BlueOrchard as of December 2022. For additional information, please visit: www.blueorchard.com.

For further information, please contact:
Tahmina Theis
+41 44 441 55 50
tahmina.theis@blueorchard.com

 

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