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Gradua Te Research Series Micro-Finance Instruments Can Contribute to Build Resilience Micro-Finance Instruments A Case Study of Coping and Adaptation Strategies to Climate-Related Can Contribute to Build Resilience Shocks in Piura, Peru by Philine Oft by Philine Oft Coping and adaptation as well as financial risk management strategies all can contribute to increase the resilience of rural livelihoods. Of importance is the right mix or combination of all of these risk management strategies and instruments. This PhD dissertation investigates the livelihood systems of farmers in the region of Piura in northern Peru. Most of these are exposed to and vulnerable to climate-related shocks like water scarcity and abundance, such as the El Niño phenomenon. The strategies of these households and the range of assets, their relations and interdependencies, as well as the prevailing social, institutional, political and environmental structures that are influencing the livelihoods are examined. A particular emphasis is put on analysing the coping and adaptation strategies of these households with a focus on the actions and available measures that they take in anticipation of or during a natural phenomenon, and to understand how they will act and adapt to these events in the future. The second part of the research explores which kind of financial services schemes are available to these rural households in the region and analyses the perception and understanding of insurance. An overview of the existing offer and demand is presented, and the necessary conditions to make these mechanisms sus- RESEARCH SERIES tainable and accessible to local farmers are evaluated. Philine Oft earned her PhD in Geography at the University of Bonn, Germany, while conducting her research within the structure of UNU-EHS. GRADUATE GRADUATE PHD DISSERTATION · Micro-Finance Instruments Can Contribute to Build Resilience Vol. 2 Oft UNU-EHS ISBN: 978-3-939923-44-2 UN Campus ISSN: 2077-737X Hermann-Ehlers-Str. 10 53113 Bonn, Germany UNU-EHS Institute for Environment UNU-EHS and Human Security A Case Study of Coping and Adaptation Strategies to Climate-Related Shocks in Piura, Peru GRADUATE RESEARCH SERIES PHD DISSERTATIONS Publication Series of UNU-EHS Vol. 2 UNU-EHS Copyright UNU-EHS 2010 The views expressed in this ISBN: 978-3-939923-44-2 Hermann-Ehlers-Str. 10 Cover Photo: Philine Oft publication are those of the e-ISBN: 978-3-939923-45-9 53113 Bonn, Germany Cover Design: author(s). Publication does ISSN: 2077-737X Tel.: + 49-228-815-0200 Andrea Wendeler not imply endorsement by Printed at Druckerei Fax: + 49-228-815-0299 Layout: Andrea Wendeler UNU-EHS or the United Paffenholz, Bonn, Germany E-mail: [email protected] Copy Editor: Nations University of any of December 2010 www.ehs.unu.edu Katharina Brach the views expressed. 500 print run This dissertation was first published online at http://hss.ulb.uni-bonn.de:90/2009/1808/1808.htm. For publication in the UNU-EHS Graduate Research Series, the manuscript was slightly revised for editorial purposes. About the author Philine Oft holds a Bachelor of Arts in Political Science and International Development Studies from McGill University in Montreal and a Master of Arts in Local and Regional Economic Development from the Institute of Social Studies in The Hague. She has spent Philine Oft several years in Peru working as a Junior Professional in Disaster Risk Management (DRM) for the Sustainable Rural Development Programme of the German Technical Cooperation (GTZ). From 2006 until 2009 she followed the International Doctoral Programme at the Centre for Development Research (ZEF) and the Department of Geography of the University of Bonn and was a Resident Scholar at the United Nations University Institute for Environment and Human Security (UNU-EHS). Her PhD research focuses on the possibilities for micro-finance tools to complement local farmers’ coping strategies to enhance their resilience against climate- related shocks in Northern Peru. Now, Philine Oft is working in Peru as a Consultant to GlobalAgRisk and the German Technical Cooperation (GTZ) developing capacities and rural strategies for weather risk management and adaptation. Micro-Finance Instruments Can Contribute to Build Resilience A Case Study of Coping and Adaptation Strategies to Climate-Related Shocks in Piura, Peru Philine Oft In Cooperation with Acknowledgement VI Acknowledgement I would like to express my gratitude to my supervisor, Professor Hans-Georg Bohle (University of Bonn), for his patient guidance, encouragement and excellent advice throughout this study. Discussions with Dr Koko Warner (UNU-EHS) were very helpful at all stages of the research. I also want to thank Dr Juan Carlos Villagrán de León (until December 2008 at UNU-EHS) for discussions and support especially in the initial phases of the research. I am also grateful to Dr Guido Lüchters (Center for Development Research, ZEF) who provided me with statistical advice at times of critical need. I would also like to thank Dr Günther Manske and Professor Paul Vlek (ZEF) and Professor Janos Bogardi (UNU-EHS) for the fruitful cooperation during the research. I would especially like to thank Mrs. Rosemarie Zabel for her constant administrative support and I am particularly grateful to Dr Ursula Beul for editing and reviewing the thesis in its final stages. In Peru, I am grateful to Alberto Aquino (GTZ Piura), Dr Pedro Talledo (Caja Municipal de Piura), with whom I had long and fruitful discussions and who sup- ported the execution of this research not only thematically but also logistically. I also acknowledge my gratitude to farmers and local authorities in Piura for their fruitful collaboration and valuable assistance in the research. Without the help of my assistants nothing would have been accomplished at all: María Isabel Gonzáles, Karina Gutierrez and David Moreno (Universidad Nacional de Piura) who support- ed me during the whole fieldwork period since its initial phase of preparing and conducting the household survey, the focus-group discussions and workshops until the final phase of data entry and analysis, and each became my friend. In particular, I would also like to thank my parents for the support they provid- ed me through my entire life and especially, I am grateful to my mother Suzanne, who passed away during the course of this research and to whom I dedicate this study. VII Foreword Foreword It is my privilege to introduce the second dissertation to appear in this series: that of Dr Philine Oft who has been with UNU-EHS since 2006 and has proved to be a very practice-oriented and dedicated researcher. This has resulted in her being granted a PhD degree by the University of Bonn with the distinction cum laude after only three years. In her dissertation, Dr Oft demonstrates how micro-finance tools can be an element that can contribute to build the resilience of the livelihood systems of rural households in Piura, Peru, which are exposed to and vulnerable to climate-related shocks. Whereas most of the research on micro-finance tools is focused on ana- lysing the demand and offer of these instruments, this dissertation goes further in analysing the social background of these livelihoods, by focusing on how the coping and adaptation strategies of rural households and governance aspects can contribute to build the resilience of these households to climate-related shocks. Dr Oft has previously worked as a Disaster Risk Management (DRM) Specialist with GTZ in the region which has given her a thorough background and knowledge of the area and culture. In her dissertation, she provides an in-depth analysis of the historical and social context of rural livelihoods while putting particular emphasis on existing actions and available measures that the farmers take in anticipation of or during a natural phenomenon, such as droughts and floods caused by El Niño, and also to understand how they will act and adapt to these events in the future. Moreover, the possibilities for climate-risk management insurance instruments, like area-based climate indexes, bundled schemes and others are evaluated. Without making a judgement on which instruments are more effective than the others, her analysis allows us to understand the different types of instruments and the necessary governance aspects that need to exist for these mechanisms to become implemented. The work of Dr Oft is an important contribution to the topic of resilience and adaptation through financial risk management instruments and could certainly prove useful to many actors involved in the development of ex-ante risk manage- ment tools against climate-related shocks in rural areas. Dr Koko Warner Head of Environmental Migration, Social Vulnerability and Adaptation Section UNU-EHS Abstract VIII Abstract This study focuses on the livelihoods of rural households in the region of Piura in northern Peru, either farmers or livestock holders. The livelihood systems of these farmers are exposed to and vulnerable to climate-related shocks like floods and droughts and the El Niño phenomenon. A particular emphasis is put on the analysis of the livelihoods and strategies of these households in order to examine the range of assets, their relations and interdependencies, as well as the prevailing social, institutional, political and environmental structures that are influencing the livelihoods. In addition, the coping and adaptation strategies of the farmers are investigated with a focus on the actions and available measures that the farmers take in anticipation of or during a natural phenomenon, and also to understand how they will act and adapt to these events in the future. Hence, their understand- ing of climate change and possible measures of how to cope with it are assessed and recommendations concerning long-term adaptation strategies with regard to climatic events are made. The second part of the research investigates what kind of protection local farmers need, which kind of financial services schemes are demanded and ap- propriate for the region, and determines the perception and understanding of in- surance in order to design marketing strategies and programmes to educate and inform the clients.
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