Given the predominance of market economies worldwide, most farmers also depend on the market to sell their produce, and market fluctuations affect their incomes. In addition, market-related volatility coupled with climate change is a source of increased risk for farmers. Several economic and financial instruments are being used with varying levels of success to offset some of these interlinked impacts. Index-based crop insurance is one such instrument that compensates farmers for losing crops due to hazards such as floods and droughts. However, several limitations in their implementation remain.
IPCC
Climate Change 2022: Impacts, Adaptation and Vulnerability
IPCC Report