Potential Demand for Drought Insurance in Burkina Faso and its Determinants

15 Pages Posted: 31 Mar 2020

See all articles by Takeshi Sakurai

Takeshi Sakurai

University of Tsukuba - International Institute for Integrative Sleep Medicine (WPI-IIIS)

Thomas Reardon

Michigan State University

Date Written: November 1997

Abstract

The objectives of this paper are twofold: (a) to estimate demand for formal drought insurance using farm household data in Burkina Faso and (b) to find what determines insurance demand. The following findings are salient. First, effective demand is found in all zones, which implies inadequacies in households' current self‐insurance strategies. Second, there is much heterogeneity in the strategies to self‐insure even within zones. Third, the expectation of public food aid decreases demand for drought insurance, which suggests that food aid is causing moral hazard. Fourth, households with large livestock holdings can reduce the size of herd by substituting drought insurance for livestock holdings.

Keywords: crop diversification, drought, food aid, insurance, livestock, risk management, Sahel, O130, Q140, Q150

Suggested Citation

Sakurai, Takeshi and Reardon, Thomas, Potential Demand for Drought Insurance in Burkina Faso and its Determinants (November 1997). American Journal of Agricultural Economics, Vol. 79, Issue 4, pp. 1193-1207, 1997, Available at SSRN: https://ssrn.com/abstract=3563141 or http://dx.doi.org/10.2307/1244277

Takeshi Sakurai (Contact Author)

University of Tsukuba - International Institute for Integrative Sleep Medicine (WPI-IIIS)

Japan

Thomas Reardon

Michigan State University ( email )

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