| The creation of weather index insurance (WII) as a low-cost commodity has the potential to change the way that over a billion, hitherto uninsured, low-income individuals in the developing world engage with risk. WII is an affordable risk-management tool because of a key simplifying assumption: that all people within the contract's bounded area will experience identical losses to extreme weather events. After a storm, weather data is used to indemnify all policyholders equally regardless of actual damage. This dissertation examines a particular WII product known as the Livelihood Protection Policy (LPP), which has been for sale in St. Lucia, an island in the Eastern Caribbean, since May 2013. I address two questions concerning this new financial product. First, what are the goals and ideas that have informed both non-profit and for-profit groups in creating LPP? Second, what are the impacts of LPP on the vulnerabilities, risk management choices, and livelihood practices of low-income individuals in St. Lucia? The first research question was addressed by gray literature review of previous WII projects, which provided a wider context, both historically and geographically, for the particular design choices of LPP. I then interviewed the designers, implementers, and distributors of LPP. The second research question was addressed by interviews with potential and actual LPP purchasers, principally farmers of bananas and other crops; bus drivers; and beekeepers.;I found that LPP is part of the insurance industry's expansion of its role in climate policy beyond adaptation. By setting up a third pillar (alongside adaptation and mitigation) called adjustment, insurers are able to access a new market of low-income people in the Global South. This market can exist because LPP is a relatively new way that nature is financialized. For centuries, standard insurance against disasters, and commodity derivatives, have overcome barriers to managing nature. But they still have limitations. They require an underlying commodity to exist --- to be insured, or for the derivative to be based on --- and the changes in the value of the underlying commodity must be tracked: in insurance that value is damaged, in derivatives it fluctuates. Relatively recently, WII has represented a way to overcome the latter requirement. WII does not track specific changes in the value of a commodity; instead, as we saw above, a weather variable is used as a proxy for that change. Now, in LPP a further barrier was overcome: the underlying thing does not need to be a commodity, as had been required in virtually all preceding WII products sold to individuals. LPP can be sold to anyone no matter what assets they own. All that matters is that they are subject to hurricane hazards. I conclude that LPP is not achieving its goal of reducing vulnerability in St. Lucia because it is not being purchased by low-income people, in part because of the relatively high cost of the premiums. Moreover, because of the way that LPP is focused technologically and discursively on hazards, rather than underlying assets, it can increase vulnerability in St. Lucia. This is because LPP allows for business as usual for the global economy, and opportunities for new profits in the Global North, while at the same time requiring the Global South's continuing exposure to climate change hazards. |
