An innovative drought insurance scheme has provided emergency support to hundreds of vulnerable farming families in western Nepal, in what Christian relief organisation Tearfund says is a major step forward in protecting communities from climate-driven hunger before disaster fully sets in.
Tearfund announced that a $100,000 insurance payout had been triggered in Nepal’s Bajura district after severe drought conditions threatened crops and livelihoods across the region.
The scheme uses satellite technology to monitor soil moisture and water availability for crops. When rainfall and moisture levels reach critically low levels, funding is automatically released without the need for lengthy damage assessments.
Tearfund said the payout is believed to be the first of its kind in Nepal and forms part of a wider pilot programme exploring “anticipatory finance” - a growing humanitarian approach aimed at releasing aid before a situation escalates.
Tearfund and its local partner, International Nepal Fellowship, provided food assistance to 671 households and dispensed drought-resistant vegetable seeds, farming tools and agricultural training to 405 people, most of them women.
Water collection tanks for small-scale irrigation were also installed for 176 households. Families facing acute food shortages received emergency supplies including rice, lentils, oil and salt.
Among those supported was 59-year-old blacksmith and farmer Bune Sunar, whose crops were devastated after flooding last summer was followed by severe drought during the winter months.
“In my whole life, I have never seen this much food in my house at one time,” he said after receiving assistance.
Sunar said his family had previously relied on modest harvests of wheat, millet and rice to survive for several months each year.
However, failed crops and worsening drought had reduced that security to just a single month’s supply of food this year.
Alongside farming, he supports his family of 11 by crafting farming tools and kitchen utensils, sometimes receiving grain instead of money as payment.
Pranaya Pandey Chhetri, Tearfund’s Country Director for Nepal, said climate-related disasters were making farming increasingly unpredictable across Asia and placing growing pressure on already vulnerable communities.
“The gap between the cost of global disasters and the finance available to respond to their impact is growing,” he said.
He added that access to insurance and emergency financial protection could help families avoid falling deeper into poverty by enabling them to protect assets, adapt livelihoods and respond more quickly to failed harvests.
“This insurance innovation brings vital finance to support those on the front lines of the climate crisis,” he remarked. “This payout is helping people keep hope alive through a desperate food shortage.”
The payout was arranged through a parametric insurance product developed by Global Parametrics, part of the CelsiusPro Group, and supported through funding from Humanity Insured, a UK-registered charity aided by the insurance sector.
The wider risk financing initiative is supported by the UK Foreign, Commonwealth and Development Office, alongside Germany’s development bank KfW.
Chief executive of CelsiusPro Group Mark Rüegg said “fast, pre-arranged financial aid” could play an important role in helping climate-vulnerable communities develop resilience against increasingly severe weather events.
He said the Nepal payout demonstrated how satellite-based insurance systems could deliver fast and practical support to families facing food insecurity and economic hardship.
Tearfund warned that countries such as Nepal are becoming more vulnerable to alternating cycles of floods and drought linked to climate change, with rural farming communities often among the hardest hit.
