This document investigates prospects for the use of index based weather insurance in Ethiopia for commercial and semi-commercial farmers. The document summarizes the impact of weather risk on Ethiopian agriculture and the need to balance investments in weather risk mitigation and weather risk management. This introduction is followed by a summary of the traditional risk-transfer tool available for managing agricultural weather risk, multi-peril crop insurance. It outlines the limitations of this approach in the Ethiopian context. An overview of the index based weather insurance product is the focus of the remainder of the document. Narrowing its scope to the potential use of index based weather insurance products in Ethiopia, the research discusses whether the prerequisites or enabling conditions for this type of product exist and whether there are any major impediments to developing a weather insurance program in the country.
