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Tourism employs 8% of the world’s people, largely in climate risk exposed countries.We develop a Tourism Livelihood Index for insurance use.



It is widely acknowledged that vulnerability to climate risks is dependent on socio-economic status.Populations who are poor,children,women,disabled are examples of the most vulnerable.They disproportionately experience the impact of shocks and stresses that accompany disasters and climate change.

Climate change poses evident threats to the tourism sector,the economic mainstay of many developing countries.We focus on the impact on The Bahamas,where these risks pose the single greatest threat to economic and social stability.Job and income security for those associated with the sector,particularly seasonal workers, domestic workers, sole proprietors, operators of micro, small and medium enterprises(MSMEs),is not guaranteed.Many of these individuals may not qualify for social assistance programmes that are often designed for persons who are indigent and unemployed.

Parametric insurance facilities such as the PCRAFI,ARC and the CCRIF/MCII have proven valuable in addressing liquidity issues faced by countries and populations following climate change related events.However, none of these instruments directly address our target population in The Bahamas.A significant portion of the target market may not have the resources to invest in social insurance schemes for their employees.Consequently,these populations are highly vulnerable and one disaster away from falling into poverty.

Our goal is to develop a social vulnerability index for tourism dependent populations that will guide the definition of premiums and payout triggers for parametric insurance or contributions to a disaster relief pool.As part of our proposal,we also investigate the feasibility of these two types of instruments using the index.We foresee global application for the TLI, once developed.

We are fully dedicated to this product's development and have been accepted by one of the world's premier entrepreneurship incubators,which will assist the team in refining this idea,but not provide any financial support.

What actions do you propose?

We propose the development of a Tourism Livelihood Index(TLI)for The Bahamas(with the intention that such work can be extended to other regions).We explore the application of such an index in the development of a parametric insurance facility specifically for tourism MSMEs and a disaster relief fund dedicated to providing assistance to the most vulnerable workers in the these enterprises. The development of such an index will be informed by an analytical framework that considers the short, medium and long term risks that weather related hazards pose to(1)sustainable revenue to MSMEs in the sector and(2) livelihoods of the most vulnerable workers in the MSME tourism sector.

The TLI comprises a suite of multidimensional indicators of income and wellbeing,(particularly health, education and standard of living) to assess vulnerability to poverty,climate change and disasters at an individual level and ultimately,eligibility for assistance through the disaster relief fund.To assess risks at the institutional level, additional indicators to assess enterprise risks will be included.


The selection of the TLI indicators will rely heavily on data and information available on poverty, disasters and climate change in the country.  A snapshot of the poverty and social protection landscape in the Bahamas is provided below.


Overview of Poverty and Social Protection in The Bahamas

According to the May 2017 Labour Force Survey, tourism is the second largest employer in the country.The sector employs 37,955 peopl (19% of the labour force),with women comprising the majority of those employed(21,805 or 57% of those employed in the sector and 23% of the entire labour force)when compared to men(16,150 or 43% of those employed in the second and 15% of the entire labour force),speaking not only to the overall impact of our work on all sector workers,but also to the potential impact of our work on gender equality in the Bahamas.New Providence, which is the region where the majority of Bahamians reside,has the highest number of people working in the sector (25,905 or 18% of the entire labour force).However, the majority of workers in Abaco in the Family Islands, 3,805 people, are employed in the Hotel and Restaurants sector, of which 2,130 (56%)are women and 1,675(44%)are men.


12.5% of the population in The Bahamas are considered poor,according to the 2013 Household Budget Expenditure Survey.Poverty rates are higher among women-headed households(9.7%)compared to men-headed households(7.1%).Poverty rates are three times the national rate(27.9%)in households headed by Haitian nationals.


Workers in the hotel and restaurants sector,along with those in construction,wholesale and retail and domestic services are in the lower expenditure quintiles.It comes as no surprise that the majority of the poor(71.5%)reside in New Providence where the majority of Bahamians live.However,the poverty rate in the Family Islands,where the hotel and restaurants sector dominates as a major employer, is the highest in The Bahamas at 17.2%.In these islands,the populations were over-represented in the two poorest quintiles(2013 Household Budget Expenditure Survey).The housing structures in the Family Islands are considered more vulnerable to natural disasters with 29.8% with outer walls made from wood and with poorer households living in these less than robust structures.61.3% of the outer walls in these islands are made from concrete,significantly lower than the national average of 80.6%. 8.8% of homes in the Family Islands depend on rainwater catchment systems as a household source of water. No other regions reported this type of water supply.

Similar to other countries in the Caribbean region, social protection services in The Bahamas are classified into two categories; contributory schemes(National Insurance Retirement Benefit, National Insurance Survivors Benefit, Unemployment Benefit)and non-contributory schemes(National Insurance Old Age Non?Contributory Pension, Food Assistance, National Lunch Programme and Free Medical(i.e. Med Card).With the exception of the Food Assistance programme, the region with the highest percentage of beneficiaries of social protection is the Family Islands.

Accessing social protection requires proof of citizenship or legal permanent residence.Given these requirements,Haitian nationals, many of whom are reported to be undocumented migrants, comprise a negligible percentage of beneficiaries,even though they experience the highest poverty rates.

Hazards and Risk Layers Targeted

To start with,the TLI will focus on hurricane/cyclone and excess rainfall hazards, which threaten incomes and revenues of the targeted population. Research shows no current scheme specifically targets this group within The Bahamas. In particular, we focus on use of such an index in the development of instruments that provide a rapid payment mechanism to meet shortfalls arising from income impacts to individuals and businesses in the MSME sector by climate and disaster risks.


Our proposal includes investigation of the specifications of the potential structure of the two separate instruments; the parametric insurance facility for tourism MSMEs to address low probability high damage/loss catastrophic events with significant financial impact; the disaster relief fund for vulnerable workers which addresses higher probability and lower loss events such as localized floods from excess rainfall that may not have high economic loss impacts,but bear significant social impacts on low income individuals.


Qualitative and quantitative research will be undertaken to obtain further insight into vulnerabilities and capacity to contribute at enterprise and individual levels for premiums, and expectations of benefits from payouts.We foresee this as being part of the value of the TLI.


The two main facilities for which such an index have applications for and that we propose to investigate are:


FINANCIAL INSTRUMENT 1: Scope for establishment of a pooled Employee Disaster Relief Fund:


This pooled risk fund to which MSMEs contribute will take the form of a self-insurance facility, with premiums paid by MSMEs, and combined with other relief funding, and targeting high probability/low loss hazard events.Payouts will be triggered based on the disaster impact, and would provide quick access to temporary cash benefit payments or guaranteed loans to persons who would most likely experience financial hardship, and who do not qualify for government social assistance.  The TLI will be used to determine eligibility for assistance. The benefit would cover immediate needs (two to four weeks after the disaster) for:

  1. Food, clothing, reasonable evacuation assistance, reasonable funeral, travel and burial expenses
  2. Significant medical (including psychological/mental health), prescription and travel expenses not eligible for medical insurance reimbursement.
  3. Temporary housing assistance: rent for up to thirty days, reasonable repairs to damaged property, essential utilities such as gas, water and electricity).


The actions required to complete this component include:

  • Focus group discussions with temporary/seasonal and full time workers on the effects of the most recent disaster and climate risk hazard events in the country on their livelihoods and their coping mechanisms.The focus groups discussions will be organised based on select types of businesses, for example transportation, guest houses/small hotels/ water sports operators, craftsmen/women, tour guides, travel agencies, small cruise operators.These discussions will also ascertain expectations of the establishment of a pooled Employee Disaster Relief Fund and expectations of benefits from the Fund.
  • Interviews with owners and managers of MSMEs on their capacity and, willingness to contribute to the pooled fund.
  • Assessment of relevant policy and programme frameworks in both the social protection and disaster risk reduction sectors. This assessment will reveal the linkages and institutional relationships between the social assistance and disaster risk reduction agencies.
  • Based on the above, the development of a business model for the Employee Disaster Relief Fund.
  • Development of a prototype beneficiary targeting mechanism for the Employee Disaster Relief Fund.



FINANCIAL INSTRUMENT 2: Scope for establishment of a parametric insurance facility for tourism MSMEs only that would be triggered by high loss/low probability events. This instrument addresses the delay that MSMEs may face in receiving relief after a disaster. It also allows some of these institutions to have some level of relief for losses that would otherwise be either uninsurable or too expensive.  Here, the index can be used to determine a trigger and payout mechanism these enterprises.


The actions required to complete this component include:

  • Desk review of the relevant policy and regulatory frameworks for MSMEs generally and in the tourism sector.
  • A review of financial and operational records of a sample of MSMEs to quantify the capacity to establish a pooled employee disaster relief fund for the most vulnerable workers within MSMEs in the tourism sector.
  • Interviews with owners and managers of MSMEs on their capacity and, willingness to contribute to the proposed financial instruments. The research will disaggregate the enterprises into specific categories based on types of businesses, size, contracts most impacted.
  • Investigation on the ways in which tourism MSMEs are affected by disasters – For instance, cancellations of bookings, lower or total loss of income resulting from fewer tourists and reduced sales of goods and services.
  • Interviews with managers of reinsurers and insurers to explore potential for private sector involvement.
  • Interviews with aggregation channels/ partners – CCRIF, credit unions, local insurers, tourism boards and associations to assess ability to subsidize premiums to determine the best partners for these schemes.
  • Interviews with Government stakeholders to assess regulatory frameworks, and possibilities for public private partnerships.
  • Gauging of Interest from other facilities (and private sector organizations) in funding or assisting development to such an instrument. Private sector involvement in sourcing premiums will help ensure financial sustainability of instruments. In addition, several Caribbean countries contribute to the Caribbean Catastrophe Risk Insurance Facility, and/or will benefit from the Green Climate Fund, among others. This component of the research will explore modalities for linkages between the proposed Employee Disaster Relief Funds and these climate finance schemes.


The above will inform the model development of the TLI.


The research will be guided by the following.


Consideration for seasonality: It is important to note that the seasonality of tourism renders employment and livelihoods in this sector highly vulnerable. From December to April, tourist demand is high. However, tourist demand tends to fluctuate from May, the start of the rainy season and during the hurricane season, from August to October. Cancellation of bookings, lower or total loss of income resulting from fewer tourists and reduced sales of goods and services are common during this period.

This seasonality of tourist demand presents challenges for the sector and particularly for MSMEs and those employed by them. This is because, less economic activity during the low season, which coincides with periods of heightened vulnerability to disasters, lowers incentives to invest in local skills, supply chains and infrastructure.

Considerations for diversity of MSMEs: MSMEs generally and the tourism sector are diverse. Efforts will be made to clearly delineate where possible, differences by size and type of business and other variables.


Considerations for diversity and vulnerability of workers: The sex, age and disability status of workers and business owners/operators, will be central to the research.


Who will take these actions?

We propose involvement of Ministries of Finance, Public Service and National Insurance, Tourism, Insurance Commission and the National Emergency Management Agency. Other regional and international agencies (including (re)insurance and scientific agencies such as CCRIF and CIMH) will need to be included if one or both of the proposed financial instruments will be developed. We also propose coloration with financial agencies in the Bahamas that have good relationships with our target demographic such as the Bahamas Development Bank.

The TLI development will be led by two individuals with backgrounds in climate risk financing, development, and social protection. Key Expert 1 will be responsible for coordinating the hazard and financial modelling factors involved in the TLI ( but foresee working with regional agencies such as the Caribbean Institute of Meteorology and Hydrology, the Bahamas Department of Meteorology, and possibly the Bahamas Society of Engineers and Bahamas Development Bank), while Key Expert 2 will be responsible for the social vulnerability development of the TLI (but expects to work closely with the Ministry of Social Services and Community Development, and the Small Business Development Centre ) . The team has also been accepted by one of the world's premier entrepreneurship incubators, which will assist the team in refining this idea, but will not provide any financial support.



The following illustrate the backgrounds of the two experts.

Where will these actions be taken?

While the applications of such an index has global consequence,we propose development of the index for piloting in one Caribbean nation (The Bahamas).The Caribbean is one of the most prone regions of climate risks.In addition,given limited fiscal space,Caribbean government are unable to meet the income and livelihood loss to individuals and businesses in the MSME sector when impacted by disasters.The country of focus for this initiative is highly prone to climate risks and also heavily dependent on tourism In the Bahamas, 53,000 (45-50%) of the country’s population is dependent on tourism.The Bahamas was also chosen because it employs a wide range of the different types of employees or operators within the industry that we are targeting,and so the lessons learnt can be applied to other Caribbean,Pacific and Indian Island countries,and to some extent larger non-island nations with significant dependence on tourism and exposure to climate risk impacts.

The project builds on an existing high-level policy focus on the MSME sector in The Bahamas.In February 2018,a Small Business Development Centre was launched in the country and is led by the Government in collaboration with the University of the Bahamas and The Bahamas Chamber of Commerce and Employers Confederation with support from the Organization of American States.The Centre will provide business advisory and technical support(see Caribbean360 article dated February 8th 2018).The Government will commit $25million over the next five years.

Initial research interventions to build the TLI will focus on New Providence,where the highest numbers of workers and tourism businesses are located,and the Family Islands,the majority of whose workforce is in tourism.The Family Islands, as noted earlier, has the highest of the poverty rates within The Bahamas;the highest percentage of the population living in less robust housing; and the highest percentage of beneficiaries of social protection services.


What are other key benefits?

A key benefit of the TLI is in its application to develop climate risk financing tools for social protection that have potential to provide rapid payouts at the institutional level for small businesses and entrepreneurs who may otherwise have no other means of protecting themselves against climate risks. These rapid payouts will expedite the recovery of tourism MSMEs after a disaster and importantly, job retention capacities. Another key benefit is the provision of rapid cash assistance at the individual level, to support low income and vulnerable employees in the tourism MSME sector who might not qualify for government assistance. These workers are often one disaster away from indigence. If successful, the same process can be replicated in other regions with similar risks including other Caribbean nations, the Pacific islands, Indian Ocean islands, Asia, and Africa, where several countries have high GDP dependence on tourism and need social protection assistance.

What are the proposal’s costs?

The SyMMulate team is seeking 40,000 Euros for the development of the TLI. This includes costs of organizing workshops and focus groups  (including travel and accommodation), as well as administrative costs for research, development and analyses.

Time line

We propose an implementation period of one year with the following timelines:

  1. A review of the natural hazard and climatic risk vulnerability of the Bahamian islands of focus(end of the 2nd month)
  2. A review of financial and operational records of a sample of MSMEs to quantify the capacity to establish a pooled disaster relief fund for the most vulnerable workers within MSMEs in the tourism sector(end of 3rd month)
  3. Focus group discussions with tourism dependent communities in the Bahamas(end of 3rd month)
  4. Interviews with managers of reinsurers and insurance agencies to explore potential for private sector involvement(end of 4th month)
  5. Interviews with aggregation channels/ partners – CCRIF, credit unions, local insurers, tourism boards and associations to assess ability to subsidize premiums(end of 5th month)
  6. Interview with regulators, government stakeholders to assess regulatory frameworks, and possibilities for public private partnerships(end of 5th month)
  7. Desk review and model development(end of 7th month) with initial TLI developed
  8. Proposal for structure on disaster insurance instrument and disaster pool(end of 9th month)
  9. Feedback to tourism dependent communities, government and regulators(end of 11th month)
  10. Finalization of TLI for one country.
  11. Clarification(and any required amendments) of regulatory requirements around parametric insurance to inform the launch of the TLI for the parametric insurance facility(End of Year 2)
  12. Clarification(and any required amendments) of regulatory framework for launch of the use if the TLI for the  employee disaster relief pool facility(End of Year 2)
  13. Development and signing of MOUs with potential partners(End of Year 2)
  14. Capacity building pre-launch of both facilities(End of Month 30)
  15. Launch of both financial instruments(End of Year 3)

While we foresee the development of the TLI for the Bahamas as a one year project(with budget as outlined earlier),we expect the use of the TLI for development of an insurance product will take roughly three years.

Related proposals

None that we know of.


World Travel & Tourism Council – Travel & Tourism Economic Impact (2017)

World Travel & Tourism Council – Travel & Tourism Economic Impact-Jamaica (2017)

World Travel & Tourism Council – Travel & Tourism Economic Impact-Bahamas (2017)


ILO/World of Work Magazine (2010) -


The Caribbean Development Bank defines MSMEs as follows : Micro: 1-5 employees; Small: 6-15 employees; and Medium: 16-50 employees (CDB, 2016)

 [1]CDB “Tourism industry Reform: Strategies for Enhanced Economic Impact”