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Are smallholder farmers willing to pay for different types of crop insurance? An application of labelled choice experiments to Chinese corn growers

Author

Listed:
  • H. Holly Wang

    (Guizhou University
    Purdue University)

  • Lu Liu

    (Institute of Agricultural Economics and Development, Chinese Academy of Agricultural Sciences)

  • David L. Ortega

    (Michigan State University)

  • Yu Jiang

    (Zhejiang University)

  • Qiujie Zheng

    (University of Alaska Anchorage)

Abstract

Crop insurance is the most common agricultural risk management instrument. In developing countries, crop insurance is becoming popular but is often provided with lower coverage, lower premiums and less subsidy than in developed countries. We use a labelled choice experiment method to investigate Chinese smallholder corn growers’ preferences for alternative types of insurance. In addition to traditional yield insurance, we assess farmers’ willingness to pay for coverage levels in price, revenue and weather index insurance, which are currently at the experimental stage in China. We find farmer preferences for these various types of insurance to be heterogeneous. On average, farmers are willing to pay for all types of insurance and for additional coverage but only at the current high subsidy level. We explore heterogeneity in willingness to pay and find that farmers’ positive past insurance experience plays a very important role in their demand for insurance.

Suggested Citation

  • H. Holly Wang & Lu Liu & David L. Ortega & Yu Jiang & Qiujie Zheng, 2020. "Are smallholder farmers willing to pay for different types of crop insurance? An application of labelled choice experiments to Chinese corn growers," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 86-110, January.
    • Handle: RePEc:pal:gpprii:v:45:y:2020:i:1:d:10.1057_s41288-019-00153-7
    DOI: 10.1057/s41288-019-00153-7
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    Cited by:

    1. Ranjan Kumar Ghosh & Shweta Gupta & Vartika Singh & Patrick S. Ward, 2021. "Demand for Crop Insurance in Developing Countries: New Evidence from India," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(1), pages 293-320, February.
    2. Qingyin Cai & Yulian Ding & Calum Tuvey & Yuehua Zhang, 2021. "The influence of past experience on farmers’ preferences for hog insurance products: a natural experiment and choice experiment in China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 399-421, July.
    3. Hong Fu & Yuehua Zhang & Yinuo An & Li Zhou & Yanling Peng & Rong Kong & Calum G. Turvey, 2022. "Subjective and objective risk perceptions and the willingness to pay for agricultural insurance: evidence from an in-the-field choice experiment in rural China," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(1), pages 98-121, March.

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