Agriculture is a key sector inBangladesh, but it is highly exposed to risks. Whileagriculture is a source of employment and livelihood fornearly one in two adults in Bangladesh and contributes about16 percent to GDP, it is highly exposed to natural hazards.Indeed, Bangladesh is commonly ranked as one of the mostvulnerable countries in the world to natural disasters withagriculture heavily exposed to floods, cyclones, anddrought. In 2007, for instance, Cyclone Sidr destroyed 0.69million hectares of cultivated crop lands and killed over460,000 head of livestock and poultry. In the past, thegovernment of Bangladesh and development partners haveprovided substantial support to farmers in the aftermath oflarge disasters, but this approach has disadvantages in thatsupport is not guaranteed to farmers and may be slow. In theaftermath of Cyclone Sidr, recovery and reconstruction needswere estimated at USD 1.3 billion, or 28 percent ofgovernment expenditures. In spite of efforts by thegovernment of Bangladesh, the gap between available fundingand needs is often large and can reach more than USD 1.5billion in bad years (Air Worldwide and ADPC 2014).Bangladesh often relies on international assistance, as overthe past ten years, only 33 percent of disaster-relatedexpenses has been met by domestic resources. In addition,disaster relief transfers often take substantial time toreach beneficiaries and require to divert resources awayfrom long term development projects. If the Government ofBangladesh decided to go ahead with support for agricultureinsurance, high-level buy-in from a broad range ofstakeholders will be necessary, as will partnerships withthe private sector. Government may consider: strengtheningthe overall legal, regulatory, and supervisory insuranceenvironment; developing a centralized database of data foragricultural insurance purposes; provision of financialsupport to the program, particularly in the early stages ofthe program; and establishing a dedicated technical teamwithin government with responsibility for implementation andfor providing input to policy. One option for considerationwould be for some or all of these activities to be carriedout through a project with technical support and/orfinancial assistance of a development partner with adequateexpertise in this field, such as the World Bank Group.
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