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Adoption of Weather-Index Insurance: Learning from Willingness to Pay Among a Panel of Households in Rural Ethiopia

In this paper we examine which farmers would be early entrants into weather index insurance markets in Ethiopia, were such markets to develop on a large scale. We do this by examining the determinants of willingness to pay for weather insurance among 1,400 Ethiopian households that have been tracked for 15 years as part of the Ethiopia Rural Household Survey. This provides both historical and current information with which to assess the determinants of demand. We find that educated, rich, and proactive individuals were more likely to purchase insurance.

An Experiment on the Impact of Weather Shocks and Insurance on Risky Investment

We conduct a framed field experiment in rural Ethiopia to test the seminal hypothesis that insurance provision induces farmers to take greater, yet profitable, risks. Farmers participated in a game protocol in which they were asked to make a simple decision: whether to purchase fertilizer, and if so, how many bags. The return to fertilizer was dependent on a stochastic weather draw made in each round of the game protocol. In later rounds of the game protocol, a random selection of farmers made this decision in the presence of a stylized weather-index insurance contract.

The Value of Customized Insurance for Farmers in Rural Bangladesh

Farmers in rural Bangladesh face multiple sources of uninsured risk to agricultural production and household assets. In this paper, we present results from an experimental demand - elicitation exercise in rural Bangladesh to shed light on smallholder farmers’ interest in formal insurance products. We propose a suite of insurance and savings products, and we randomly vary the price of one insurance option (area - yield insurance) and the presence of one of the savings options (group savings).

Flexible Insurance for Heterogeneous Farmers: Results from a Small Scale Pilot in Ethiopia

We analyze the effectiveness of a new approach in providing weather index-based insurance products to low-income populations. The approach is based on the concept of providing multiple weather securities that pay a fixed amount if the event written on the security (that monthly rainfall at a nearby weather station falls below a stated cutoff) comes true. A theoretical model is developed to outline the conditions in which weather securities could outperform crop-specific weather index-based insurance policies.

Africa Agriculture Status Report 2017

The authors first discuss the value of value chains and how they can benefit from resilience. They follow this with a detailed analysis of the risks and resilience of different components of the value chain and conclude with a discussion of the business of resilience.  

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Parametric versus Nonparametric Methods in Risk Scoring

Accurately assessing risk is key to providing appropriately priced loans to rural producers. This paper examines non-parametric techniques for risk scoring to avoid the erroneous rejection of credit-worthy loan applicants. Both parametric and non-parametric techniques were tested against simulated data and then evaluated on microfinance loan applicants in Peru. Because non-parametric techniques impose fewer modeling assumptions, they are able to better predict default.

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