Agriculture is highly exposed to climate risks, and so climate hazards can have significant negative impacts on agricultural economies.
The Rwandan government’s agriculture-led development agenda reduced the sensitivity of the sector and built adaptive capacity among its workforce but did little to diversify the economy.
Moderate increases in exposure to flood risk from capital investments were outweighed by reductions in sensitivity from productivity gains, soil conservation and irrigation.
Economic development contributed to adaptive capacity through poverty reduction and improvements in education and training. This was complemented with risk management policies such as agricultural insurance and disaster planning.
With economic diversification and growth, reduced exposure or sensitivity to climate hazards can introduce new risks (market and reputation) - policymakers must consider integrated risk hedging for changing risk profiles.
The paper identifies 14 key policy implications.