In developing countries, climate variability often hampers small farm productivity, making agriculture and livestock risky activities. In particular, droughts can significantly reduce the harvest, and their unpredictability can lead small farmers to avoid productive investments. Furthermore, small farmers have little or no access to credit, further decreasing their resilience to drought and other natural phenomena.

To increase farmers’ resilience to droughts in the Dominican Republic, a USAID-funded project, called “Index Insurance and Climate Change” was started in 2012 with the aim of developing a sustainable parametric insurance product for small farmers, based on quasi-real-time satellite information. This product is intended to compensate for the losses and the increase in forage need due to droughts. The NDVI index is used to monitor the biomass on the whole domain of study, every ten days. When the biomass drops below a threshold, the parametric insurance is activated, and a payout is due to the farmers.

RED has been selected by the consortium leading the project as the independent calculation agent. RED’s duties are to perform drought index calculation every ten days, to produce an assessment of the potential drought and to compute the potential payouts for the farmers.