Innovative Adaptation Financing to Build the Resilience and Adaptive Capacity of Smallholder Farmers in Bhutan (InAF-Bhutan)

The project’s main goal is to enhance the resilience of smallholder farmers in Bhutan to key identified climate risks and enhance their food security by rolling out innovative index-based microinsurance through an integrated resilience building approach. The project will achieve its goal through the following three objectives: 1. Strengthen climate-resilient agricultural practices to underpin integrated climate risk management by smallholder farmers; 2. Roll out innovative climate risk transfer mechanism and build smallholder farmers’ resilience through integrated approach; and 3. Institutionalise innovative climate risk management for long-term sustainability. The project will meet these objectives through three interlinked components as detailed in Part II.A that will deliver an integrated package of interventions to address key causes of vulnerability to climate change and food insecurity for vulnerable smallholder farmers in selected districts in Bhutan. Component 1 focuses on enabling risk reduction to decrease overall exposure to more frequent and less severe climate risks on the part of smallholder farmers. The bulk of the project budget will be allocated to Component 2 for the rolling out of index insurance, including for the necessary associated activities of increasing access of predominantly women farmers to savings products and microfinance and of facilitating concrete adaptation activities to enhance climate-resilient production, as well as diversified livelihoods through value chain and marketing support for climate-resilient value chains. Under Component 3 the project will implement activities to institutionalise the innovative climate risk management approach of index-based microinsurance delivered in an integrated resilience building approach for long-term sustainability.