As climate change evolves, and floods and droughts become more severe and frequent in Sudan, there is a need to find approaches, which can reduce the sensitivity of farmers and pastoralists to increasing rainfall variability. Smallholder rain-fed farmers and pastoralists are particularly vulnerable to climate change and are in desperate need of risk reduction measures. However, limited financial services are available to this high-risk population, to provide them capital for resilient-building activities and insurance companies have failed to provide coverage during extreme weather events. This project will address these issues by supporting the development of a range of financial mechanisms to incentivize investments in climate change adaptation and risk reduction measures in six vulnerable agro-ecological regions of Sudan. To effectively monitor extreme weather risks, LDCF resources will support efficient, robust collection and interpretation of weather/climate information for risk mapping, rainfall forecasting and drought early warning. Simultaneously, funds will be used to support the development of Sudan's first Weather Index Insurance products, which will be strategically combined with microfinance services supporting adaptation-oriented agricultural and livestock practices. To ensure sustainability with these tasks, it is necessary to build the capacity of the National Hydro-Meteorological Services to have the technical and operational capacity to maintain equipment and models long-term. Similarly, regulatory frameworks for financial services must be updated and capacities within the financial/insurance institutions must be built to target small-holder rain-fed farmers and pastoralists. In particular, insurance products must be designed to address residual climate risk, while microfinance products must take into account seasonal payment schedules and pastoral mobility. The timing is right to develop such products because credit services can take advantage of the current legal frameworks and national strategies promoting microfinance services for agriculture in addition to the large amounts of lending capital available. Furthermore, by gaining experience in Weather Index Insurance and recognizing the importance of continuous weather/climate observations, both public and private insurance sectors will serve as important catalysts in supporting sustainable environmental monitoring