Index Insurance for Developing Country Agriculture: A Reassessment

Posted: 27 Oct 2017

See all articles by Michael Carter

Michael Carter

University of California, Davis

Alain de Janvry

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy

Elisabeth Sadoulet

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy

Alexandros Sarris

National and Kapodistrian University of Athens

Date Written: October 2017

Abstract

With uninsured risk representing a major hurdle to investment, productivity growth, and poverty reduction in developing country smallholder agriculture, index-based agricultural insurance has offered the promise of overcoming the hurdles of traditional indemnity-based insurance for this context. In spite of extensive experimentation, take-up has been disappointingly low without large and sustained subsidies. We show that existing constraints on take-up can partially be overcome using revised contract designs, advanced technology for better measurement, improved marketing, and better policy support. However, because index insurance is likely to remain expensive in that context, we suggest that improved index insurance be combined with stress tolerant seed varieties and new risk-oriented savings and credit products that build on the complementarities between what can be offered by index insurance and these other instruments to cope with shocks and manage risk.

Suggested Citation

Carter, Michael and de Janvry, Alain and Sadoulet, Elisabeth and Sarris, Alexandros, Index Insurance for Developing Country Agriculture: A Reassessment (October 2017). Annual Review of Resource Economics, Vol. 9, Issue 1, pp. 421-438, 2017, Available at SSRN: https://ssrn.com/abstract=3060465 or http://dx.doi.org/10.1146/annurev-resource-100516-053352

Michael Carter (Contact Author)

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Alain De Janvry

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

Elisabeth Sadoulet

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

Alexandros Sarris

National and Kapodistrian University of Athens ( email )

5 Stadiou Strt
Athens, 12131
Greece

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