Small farmers’ preferences for weather index insurance: insights from Kenya
Abstract Background Smallholder farmers in developing countries are particularly vulnerable to climate shocks but often lack access to agricultural insurance. Weather index insurance (WII) could reduce some of the problems associated with traditional, indemnity-based insurance programs, but uptake h...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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BMC
2018-07-01
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| Series: | Agriculture & Food Security |
| Subjects: | |
| Online Access: | http://link.springer.com/article/10.1186/s40066-018-0200-6 |
| _version_ | 1818111476482703360 |
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| author | Kenneth W. Sibiko Prakashan C. Veettil Matin Qaim |
| author_facet | Kenneth W. Sibiko Prakashan C. Veettil Matin Qaim |
| author_sort | Kenneth W. Sibiko |
| collection | DOAJ |
| description | Abstract Background Smallholder farmers in developing countries are particularly vulnerable to climate shocks but often lack access to agricultural insurance. Weather index insurance (WII) could reduce some of the problems associated with traditional, indemnity-based insurance programs, but uptake has been lower than expected. One reason is that WII contracts are not yet sufficiently tailored to the needs and preferences of smallholder farmers. This study combines survey and choice-experimental data from Kenya to analyze the experience with an existing WII program and how specific changes in the contractual design might encourage uptake. Results Many smallholders struggle with fully understanding the functioning of the program, which undermines their confidence. Regular provision of relevant rainfall measurements and thresholds would significantly increase farmers’ willingness to pay for WII. Mechanisms to reduce basis risk are also positively valued by farmers, although not to the same extent as higher levels of transparency. Finally, offering contracts to small groups rather than individual farmers could increase insurance uptake. Conclusions Better training on WII and regular communication are needed. Group contracts may help to reduce transaction costs. Farmer groups can also be important platforms for learning about complex innovations, including novel risk transfer products. These concrete results are specific to Kenya; however, they provide some broader policy-relevant insights into typical issues of WII in a small-farm context. |
| first_indexed | 2024-12-11T03:03:39Z |
| format | Article |
| id | doaj.art-c96bdbc11d1f4ea3bb0a2e597430050c |
| institution | Directory Open Access Journal |
| issn | 2048-7010 |
| language | English |
| last_indexed | 2024-12-11T03:03:39Z |
| publishDate | 2018-07-01 |
| publisher | BMC |
| record_format | Article |
| series | Agriculture & Food Security |
| spelling | doaj.art-c96bdbc11d1f4ea3bb0a2e597430050c2022-12-22T01:22:59ZengBMCAgriculture & Food Security2048-70102018-07-017111410.1186/s40066-018-0200-6Small farmers’ preferences for weather index insurance: insights from KenyaKenneth W. Sibiko0Prakashan C. Veettil1Matin Qaim2Department of Agricultural Economics and Rural Development, School of Agriculture and Food Security, Maseno UniversityInternational Rice Research InstituteDepartment of Agricultural Economics and Rural Development, University of GoettingenAbstract Background Smallholder farmers in developing countries are particularly vulnerable to climate shocks but often lack access to agricultural insurance. Weather index insurance (WII) could reduce some of the problems associated with traditional, indemnity-based insurance programs, but uptake has been lower than expected. One reason is that WII contracts are not yet sufficiently tailored to the needs and preferences of smallholder farmers. This study combines survey and choice-experimental data from Kenya to analyze the experience with an existing WII program and how specific changes in the contractual design might encourage uptake. Results Many smallholders struggle with fully understanding the functioning of the program, which undermines their confidence. Regular provision of relevant rainfall measurements and thresholds would significantly increase farmers’ willingness to pay for WII. Mechanisms to reduce basis risk are also positively valued by farmers, although not to the same extent as higher levels of transparency. Finally, offering contracts to small groups rather than individual farmers could increase insurance uptake. Conclusions Better training on WII and regular communication are needed. Group contracts may help to reduce transaction costs. Farmer groups can also be important platforms for learning about complex innovations, including novel risk transfer products. These concrete results are specific to Kenya; however, they provide some broader policy-relevant insights into typical issues of WII in a small-farm context.http://link.springer.com/article/10.1186/s40066-018-0200-6Climate riskSmallholder farmersCrop insuranceDiscrete choice experimentAfrica |
| spellingShingle | Kenneth W. Sibiko Prakashan C. Veettil Matin Qaim Small farmers’ preferences for weather index insurance: insights from Kenya Agriculture & Food Security Climate risk Smallholder farmers Crop insurance Discrete choice experiment Africa |
| title | Small farmers’ preferences for weather index insurance: insights from Kenya |
| title_full | Small farmers’ preferences for weather index insurance: insights from Kenya |
| title_fullStr | Small farmers’ preferences for weather index insurance: insights from Kenya |
| title_full_unstemmed | Small farmers’ preferences for weather index insurance: insights from Kenya |
| title_short | Small farmers’ preferences for weather index insurance: insights from Kenya |
| title_sort | small farmers preferences for weather index insurance insights from kenya |
| topic | Climate risk Smallholder farmers Crop insurance Discrete choice experiment Africa |
| url | http://link.springer.com/article/10.1186/s40066-018-0200-6 |
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