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Abstract:
The objective of this paper is to frame the key issues and summarize the current state of knowledge about and innovations in index-based risk transfer products (IBRTPs) as they relate to the management of climate risk for poverty reduction, especially of chronic or persistent poverty. In the past several years, interest in and experimentation with weather index insurance and other IBRTPs has grown rapidly. Though no one should expect that these innovations alone can solve the problem of chronic poverty, index-based financing opens up a range of intriguing possibilities.

The remainder of this paper is comprised of five major sections that discuss:
1) how weather risks and climate shocks impact the poor in developing countries;
2) the concept of poverty traps, highlighting how conventional risk management strategies typically do not work well for managing covariate weather risk;
3) the limitations and opportunities of financial innovations using index-based risk transfer products (IBRTPs) for reducing or transferring weather risks and climate shocks;
4) a poverty traps-based typology of IBRTPs;
5) key remaining challenges in developing and implementing index-based risk financing for use in the global struggle to end chronic poverty.

Abstract:
We present a simple two-period, dual-economy model in which migration options may affect the informal financing of educational investments. When credit contracts are universally available and perfectly enforceable, spatially varied returns to human capital have no effect on educational investment patterns. But when financial markets are incomplete and informal mechanisms with imperfect contract enforcement must fill the breach, attributes that affect the returns to education will affect educational lending and, consequently, educational attainment. Migration options can increase the returns to education, but can also choke off the informal finance on which poorer rural households may depend for long-term, lumpy investments like children's education.

Abstract:
This paper presents a simple two-period, dual economy model in which migration options may affect the informal financing of educational investments. When credit contracts are universally available and perfectly enforceable, spatially varied returns to human capital have no effect on educational investment patterns. But when financial markets are incomplete and informal mechanisms subject to imperfect contract enforcement must fill the breach, spatial inequality in infrastructure or other attributes that affect the returns to education create spatial differentiation in educational lending and consequently, in educational attainment. Although migration options can increase the returns to education, they can also choke off the informal finance on which poorer rural households depend for long-term, lumpy investments like children's education.

Poverty traps, Informal finance, Education, Rural-Urban migration

Abstract:
This paper illustrates how weather derivatives indexed to forecasts of famine can be designed and used by operational agencies and donors to facilitate timely and reliable financing for effective emergency response to climate-based, slow-onset disasters such as drought. We provide a general framework for derivative contracts, especially in the context of index insurance and famine catastrophe bonds, and show how they can be used to complement existing tools and facilities in drought risk financing through a risk layering strategy. We use the case of arid lands of northern Kenya, where rainfall proves a strong predictor of widespread and severe child wasting, to provide a simple empirical illustration of the potential contract designs.

Covariate risk, weather derivatives, catastrophe bond, famine relief, food aid, food insecurity, pastoralists, Kenya

Abstract:
This paper presents a simple two-period, dual economy model in which migration options may affect the informal financing of educational investments. When credit contracts are universally available and perfectly enforceable, spatially varied returns to human capital have no effect on educational investment patterns. But when financial markets are incomplete and informal mechanisms subject to imperfect contract enforcement must fill the breach, spatial inequality in infrastructure or other attributes that affect the returns to education create spatial differentiation in educational lending and consequently, in educational attainment. Although migration options can increase the returns to education, they can also choke off the informal finance on which poorer rural households depend for long-term, lumpy investments like children's education.