The Spillover Impact of Index Insurance on Agricultural Investment by Cotton Farmers in Burkina Faso

32 Pages Posted: 24 Jul 2020

See all articles by Quentin Stoeffler

Quentin Stoeffler

Istanbul Technical University

Michael Carter

University of California, Davis

Catherine Guirkinger

University of Namur - Centre de Recherche en Economie du Developpement (CRED)

Wouter Gelade

Association Internationale de la Mutualite (AIM)

Date Written: July 2020

Abstract

This paper examines whether agricultural insurance can boost investment by small scale farmers in West Africa. We conduct a randomized evaluation to analyze the impacts of index insurance for cotton farmers in Burkina Faso. We find no impact of insurance on cotton, but, consistent with microeconomic theory, we find significant spillover impacts on investment in other agricultural activities. Furthermore, the effects of insurance payouts on farmers hit by a shock confirm the potential of index insurance as a risk-management tool. However, we uncover important flaws in the implementation of the project that limited its impacts. Overall, this study suggests a promising role of index insurance for stimulating investment, but also draws attention to key challenges for an efficient delivery of insurance to small farmers. Finally, the hybrid, mixed methods RCT design that we employ offers lessons for the evaluation of complex interventions where trust, understanding and timing are all important.

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Suggested Citation

Stoeffler, Quentin and Carter, Michael and Guirkinger, Catherine and Gelade, Wouter, The Spillover Impact of Index Insurance on Agricultural Investment by Cotton Farmers in Burkina Faso (July 2020). NBER Working Paper No. w27564, Available at SSRN: https://ssrn.com/abstract=3658860

Quentin Stoeffler (Contact Author)

Istanbul Technical University ( email )

MaƧka
Istanbul
Turkey

HOME PAGE: http://q.stoeffler.org

Michael Carter

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Catherine Guirkinger

University of Namur - Centre de Recherche en Economie du Developpement (CRED) ( email )

Rue de Bruxelles 61
Namur, 5000
Belgium

Wouter Gelade

Association Internationale de la Mutualite (AIM) ( email )

B-1000 Brussels
Belgium

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