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Is Agricultural Insurance Fulfilling Its Promise for the Developing World? A Review of Recent Evidence

Author

Listed:
  • Berber Kramer

    (International Food Policy Research Institute (IFPRI), Nairobi, Kenya)

  • Peter Hazell

    (International Food Policy Research Institute (IFPRI), Washington, DC, USA)

  • Harold Alderman

    (International Food Policy Research Institute (IFPRI), Washington, DC, USA)

  • Francisco Ceballos

    (International Food Policy Research Institute (IFPRI), Washington, DC, USA)

  • Neha Kumar

    (International Food Policy Research Institute (IFPRI), Washington, DC, USA)

  • Anne G. Timu

    (International Food Policy Research Institute (IFPRI), Washington, DC, USA)

Abstract

Innovations in agricultural index insurance have raised expectations that the private sector can overcome shortcomings associated with more traditional indemnity-based products like multiperil crop insurance and strengthen agricultural risk management at scale across developing countries. This article updates previous reviews on agricultural insurance but differs in that it goes beyond the prognosis that recent innovations can help make insurance more commercially viable. As such, it addresses two important challenges that have received limited attention. First, it distinguishes different types of farm households and recognizes that many are excluded from the insurance market, describing additional innovations that can help make insurance more accessible to these excluded groups. Second, it acknowledges that insurance for catastrophic risks is unaffordable for most farmers and summarizes new developments in disaster assistance and safety net programs that can provide broader protection against these risks. The review concludes that cost-benefit analyses of subsidized insurance programs will be crucial for guiding public spending decisions.

Suggested Citation

  • Berber Kramer & Peter Hazell & Harold Alderman & Francisco Ceballos & Neha Kumar & Anne G. Timu, 2022. "Is Agricultural Insurance Fulfilling Its Promise for the Developing World? A Review of Recent Evidence," Annual Review of Resource Economics, Annual Reviews, vol. 14(1), pages 291-311, October.
    • Handle: RePEc:anr:reseco:v:14:y:2022:p:291-311
    DOI: 10.1146/annurev-resource-111220-014147
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    Citations

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    Cited by:

    1. Matthew Stuart & Cindy Yu & David A. Hennessy, 2023. "The Impact of Stocks on Correlations of Crop Yields and Prices and on Revenue Insurance Premiums using Semiparametric Quantile Regression," Papers 2308.11805, arXiv.org.
    2. Gatti, Nicolas & Cecil, Michael & Baylis, Kathy & Estes, Lyndon & Blekking, Jordan & Heckelei, Thomas & Vergopolan, Noemi & Evans, Tom, 2023. "Is closing the agricultural yield gap a “risky” endeavor?," Agricultural Systems, Elsevier, vol. 208(C).
    3. Kramer, Berber & Porter, Maria & Wassie Bizuayehu, Solomon, 2023. "Basis Risk, Social Comparison, Perceptions of Fairness and Demand for Insurance: A Field Experiment in Ethiopia," 2024 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2024, San Antonio, Texas 339075, Agricultural and Applied Economics Association.
    4. Kramer, Berber & Pattnaik, Subhransu & Ward, Patrick S. & Xu, Yingchen, 2023. "Impacts of a digital credit-insurance bundle for landless farmers: Evidence from a cluster randomized trial in Odisha, India," 2024 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2024, San Antonio, Texas 339080, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    agricultural insurance; disaster assistance; literature review; social safety nets; technological innovations;
    All these keywords.

    JEL classification:

    • G52 - Financial Economics - - Household Finance - - - Insurance
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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