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Agricultural Insurance and Economic Development

Author

Listed:
  • Shawn A. Cole

    (Finance Unit, Harvard Business School, Boston, Massachusetts 02163)

  • Wentao Xiong

    (Department of Economics, Harvard University, Cambridge, Massachusetts 02138)

Abstract

This article provides a review of recent research on agricultural insurance (AI) in developing countries. Agricultural producers face a variety of significant risks; historically, only government-subsidized products have achieved widespread adoption. A recent contractual innovation, which links insurance payouts to realized weather rather than farmer indemnity, has spurred substantial research in the past decade. This review begins by describing the experience in developed economies and then turns to developing countries, covering the following topics: farmers' adoption of AI, how AI affects their decision to invest in risky assets, and the extent to which AI helps farmers smooth income and consumption. We conclude with suggestions for future research and practice related to AI in developing countries.

Suggested Citation

  • Shawn A. Cole & Wentao Xiong, 2017. "Agricultural Insurance and Economic Development," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 235-262, September.
    • Handle: RePEc:anr:reveco:v:9:y:2017:p:235-262
    DOI: 10.1146/annurev-economics-080315-015225
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    Citations

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    Cited by:

    1. Nicoletta Batini, 2019. "Transforming Agri-Food Sectors to Mitigate Climate Change: The Role of Green Finance," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 88(3), pages 7-42.
    2. Shaolong Zeng & Bingying Qi & Minglin Wang, 2022. "Agricultural Insurance and Agricultural Economic Growth: The Case of Zhejiang Province in China," IJERPH, MDPI, vol. 19(20), pages 1-21, October.
    3. Bulte, Erwin & Cecchi, Francesco & Lensink, Robert & Marr, Ana & van Asseldonk, Marcel, 2020. "Does bundling crop insurance with certified seeds crowd-in investments? Experimental evidence from Kenya," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 744-757.
    4. Lichtenberg, Erik & Iglesias, Eva, 2022. "Index insurance and basis risk: A reconsideration," Journal of Development Economics, Elsevier, vol. 158(C).
    5. Qingxia Wang & Yim Soksophors & Angelica Barlis & Shahbaz Mushtaq & Khieng Phanna & Cornelis Swaans & Danny Rodulfo, 2022. "Willingness to Pay for Weather-Indexed Insurance: Evidence from Cambodian Rice Farmers," Sustainability, MDPI, vol. 14(21), pages 1-17, November.
    6. Rigo, Roberta & Santos, Paulo & Frontuto, Vito, 2022. "Landscape heterogeneity, basis risk and the feasibility of index insurance: An analysis of rice in upland regions of Southeast Asia," Food Policy, Elsevier, vol. 108(C).
    7. Md Monjurul Islam & Tofael Ahamed & Ryozo Noguchi, 2018. "Land Suitability and Insurance Premiums: A GIS-based Multicriteria Analysis Approach for Sustainable Rice Production," Sustainability, MDPI, vol. 10(6), pages 1-28, May.
    8. Birthal, Pratap S. & Hazrana, Jaweriah & Negi, Digvijay S. & Mishra, Ashok K., 2022. "Assessing benefits of crop insurance vis-a-vis irrigation in Indian agriculture," Food Policy, Elsevier, vol. 112(C).
    9. Boyd, Chris M. & Bellemare, Marc F., 2022. "Why not insure prices? Experimental evidence from Peru," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 580-631.
    10. Simona Fortunati & Donato Morea & Enrico Maria Mosconi, 2020. "Circular economy and corporate social responsibility in the agricultural system: Cases study of the Italian agri-food industry," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(11), pages 489-498.
    11. Fabio G., Santeramo & Ilaria, Russo & Emilia, Lamonaca, 2022. "Italian subsidised crop insurance: what the role of policy changes," MPRA Paper 115299, University Library of Munich, Germany.
    12. Ibrahima Sall & Russell Tronstad, 2021. "Simultaneous Analysis of Insurance Participation and Acreage Response from Subsidized Crop Insurance for Cotton," JRFM, MDPI, vol. 14(11), pages 1-20, November.
    13. Vis Taraz, 2023. "Public works programmes and agricultural risk: Evidence from India," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(2), pages 198-223, April.
    14. Casaburi, Lorenzo & ,, 2018. "Time vs. State in Insurance: Experimental Evidence from Contract Farming in Kenya," CEPR Discussion Papers 12896, C.E.P.R. Discussion Papers.
    15. Alice Bonou & Markus Olapade & Alessandra Garbero & Leonard Wantchekon, 2023. "Evaluation of the Effects of Introducing Risk Management Tools in Agricultural Development: The Case of PADAER Senegal," Agriculture, MDPI, vol. 13(5), pages 1-15, April.
    16. Belissa, Temesgen & Bulte, Erwin & Cecchi, Francesco & Gangopadhyay, Shubhashis & Lensink, Robert, 2019. "Liquidity constraints, informal institutions, and the adoption of weather insurance: A randomized controlled Trial in Ethiopia," Journal of Development Economics, Elsevier, vol. 140(C), pages 269-278.
    17. Yugang Ding & Cheng Sun, 2022. "Does agricultural insurance promote primary industry production? Evidence from a quasi-experiment in China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(2), pages 434-459, April.
    18. Vilenchuk, Oleksandr, 2018. "Трирівневий Аналіз Функціонування Ринку Аграрного Страхування В Україні," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 4(2), June.
    19. Mukherjee, Subhankar & Pal, Parthapratim, 2019. "On Improving Awareness about Crop Insurance in India," Review of Agrarian Studies, Foundation for Agrarian Studies, vol. 9(1), July.
    20. Erwin Bulte & Robert Lensink, 2021. "Empowerment and intimate partner violence: Domestic abuse when household income is uncertain," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 148-162, February.
    21. Walter Leal Filho & Franziska Wolf & Stefano Moncada & Amanda Lange Salvia & Abdul-Lateef Babatunde Balogun & Constantina Skanavis & Aristea Kounani & Patrick D. Nunn, 2022. "Transformative adaptation as a sustainable response to climate change: insights from large-scale case studies," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(3), pages 1-26, March.
    22. Xiao Lin & W. Jean Kwon, 2020. "Application of parametric insurance in principle‐compliant and innovative ways," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 23(2), pages 121-150, June.

    More about this item

    Keywords

    agricultural insurance; risk management; risky investment;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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