Given the growing socioeconomic impacts caused by the intensification of extreme weather events — such as droughts and floods — insurance emerges as a relevant financial instrument for protection against losses associated with these phenomena. In the specific case of droughts, the research project A Strategy for Municipalities to Adapt and Mitigate Extreme Climate Events proposes water reuse models as integrated solutions for mitigation and adaptation. The project innovates by developing a metrics matrix that assesses the relevance and impacts of water reuse across different sectors of the economy, in addition to producing a manual with concepts and practices to support municipalities in managing these risks. The results indicate that improvements in water resource management can positively influence the pricing of parametric insurance, reducing costs and promoting more efficient climate risk management, thereby encouraging broader adoption of this type of insurance, especially in Brazilian municipalities.

Institute of Innovation in Insurance and Reinsurance (FGV IISR)
Researcher: Gesner Oliveira, Thelma Krug, Franziska Arnold-Dwyer, Maria Lima, Ana Silva Santos, Ceci de Caprio, Túlio Marques, and Luccas Saqueto

Learn more.