Climate change

How blockchain can bring weather insurance to people in the face of climate change

A new philanthropic effort is using blockchain technology to help insure farmers in Africa.

Lemonade Foundation, the philanthropic arm of Lemonade Insurance (LMND), uses technology from several different blockchain platforms, including Avalanche, Chainlink, and DAOstack, to help create a pool of capital through which investors can provide funds to ensure Farmers.

Lemonade Foundation is funded by Lemonade, but operates independently of the parent organization. The company grew over 78% year-over-year in 2021 and is expected to grow another 70% this year.

The Lemonade Crypto Climate Coalition seeks to provide insurance to African farmers, who often have to deal with unstable weather conditions that can cause supply-side nightmares. Because many countries in Africa lack the advanced meteorological infrastructure needed to accurately predict weather conditions.

A man pushes his bicycle along the RN13 (National Road 13), near Ambovombe, Madagascar, February 14, 2022. Madagascar has always experienced extreme weather events, but scientists say these are likely to increase as human-induced climate change will cause temperatures to rise. Four years of drought, along with deforestation caused by people burning or cutting down trees to make charcoal or to open up land for agriculture, have turned the region into a bowl of dust. REUTERS/Alkis Konstantinidis SEARCH ‘KONSTANTINIDIS MADAGASCAR DROUGHT’ FOR THIS STORY. SEARCH “WIDER PICTURE” FOR ALL STORIES

This can leave farmers and people who grow their own food very unprepared for erratic weather conditions such as cyclones, droughts and intense floods. The coalition attempts to analyze data patterns using data tools from Lemonade and several other technology companies to create “very precise, fully automated” weather insurance models.

“[This project] brings together three of our passions in areas where we have domain expertise, which [are] insurance, technology and social impact,” Daniel Schreiber, director of the Lemonade Foundation, told Yahoo Finance Live in a recent segment. “So we’re playing in an area that we think we can contribute to and perhaps uniquely contribute to.”

According to Foundation website, the coalition seeks to address three challenges: “accurately quantify weather risks; automate claims assessment; and provide adequate funding and reinsurance. It is an example of a decentralized autonomous organization (DAO) and is based on an “eco-responsible” blockchain.

Smallholder farmers gather to collect a donation of cabbages used as pig feed in drought-stricken Graaff-Reinet, South Africa November 14, 2019. Picture taken November 14, 2019. REUTERS/Mike Hutchings

Smallholder farmers gather to collect a donation of cabbages used as pig feed in drought-stricken Graaff-Reinet, South Africa November 14, 2019. Picture taken November 14, 2019. REUTERS/Mike Hutchings

The Lemonade Crypto Climate Coalition is just one of a plethora startups and nonprofits looking to use blockchain to address social and economic challenges around the world.

“Blockchain has had a huge impact on the financial industry so far, but it’s really hard to pinpoint where it’s been able to make a difference, not in the crypto world, but in fact in the world. hardware,” Schreiber said. “On the other hand, you have some 2 billion people on the planet who depend on what they grow to get through the year. And they are overwhelmingly not only uninsured, but uninsurable. They have small farms that just don’t make sense compared to traditional models to insure.

By harnessing the distributed power of blockchain, investors may be able to kill two birds with one stone, Schreiber said.

Ihsaan Fanusie is a writer at Yahoo Finance. Follow him on Twitter @IFanusie.

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