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Farmers’ Willingness to Pay for Index Based Crop Insurance in Pakistan: A Case Study on Food and Cash Crops of Rain-fed Areas

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  • Ali, Akhter

Abstract

In Pakistan, agriculture is vulnerable to multiple risks, especially in the rain-fed areas. The crop insurance can serve as a useful tool to manage risks in the rain-fed areas of Pakistan. This study has assessed farmers’ willingness to pay for insurance in the rain-fed areas of Pakistan by conducting a survey of 531 farmers in the Soon valley and Talagang areas of Pakistan. The farmers’ willingness to pay for the index based crop insurance has been studied by employing the different econometric models. It has been found that these rain-fed areas consider indexed based insurance to be an important risk management strategy. The empirical results have indicated that farmers’ economic status, household assets and membership of community organization are the important determinants of their willingness to pay a higher insurance premium. The propensity score matching results have revealed that farmers were satisfied with index based insurance and were also willing to increase the area under food as well as cash crops. This study has suggested that to make agricultural insurance scheme more successful, the government should provide subsidy which will help in increasing the area under food and cash crops and shall ensure food security in the region.

Suggested Citation

  • Ali, Akhter, 2013. "Farmers’ Willingness to Pay for Index Based Crop Insurance in Pakistan: A Case Study on Food and Cash Crops of Rain-fed Areas," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 26(2).
    • Handle: RePEc:ags:aerrae:162145
    DOI: 10.22004/ag.econ.162145
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    Cited by:

    1. Mbonane, Nobuhle Duduzile, 2018. "An analysis of farmers’ preferences for crop insurance: a case of maize farmers in Swaziland," Research Theses 334771, Collaborative Masters Program in Agricultural and Applied Economics.
    2. Hira CHANNA*, 2018. "Potential For Index Insurance In Barani Areas Of Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 28(1), pages 1-17.
    3. Afriyie-Kraft, Lydia & Zabel, Astrid & Damnyag, Lawrence, 2020. "Index-based weather insurance for perennial crops: A case study on insurance supply and demand for cocoa farmers in Ghana," World Development Perspectives, Elsevier, vol. 20(C).
    4. K.S. , A. & Khan, T. & Kishore, A., 2018. "Willingness to pay for Weather Based Crop Insurance in Punjab," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277516, International Association of Agricultural Economists.
    5. Ashimwe, Olive, 2016. "An Economic Analysis Of Impact Of Weather Index-Based Crop Insurance On Household Income In Huye District Of Rwanda," Research Theses 265675, Collaborative Masters Program in Agricultural and Applied Economics.
    6. Dadang Jainal Mutaqin & Koichi Usami, 2019. "Smallholder Farmers’ Willingness to Pay for Agricultural Production Cost Insurance in Rural West Java, Indonesia: A Contingent Valuation Method (CVM) Approach," Risks, MDPI, vol. 7(2), pages 1-18, June.
    7. Ashimwe, Olive, 2016. "An Economic Analysis Of Impact Of Weather Index-Based Crop Insurance On Household Income In Huye District Of Rwanda," Research Theses 276460, Collaborative Masters Program in Agricultural and Applied Economics.
    8. Aina, I. & Ayinde, O.E. & Thiam, D. & Miranda, M., 2018. "Willingness to Pay for Index-Based Livestock Insurance: Perspectives from West Africa," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277383, International Association of Agricultural Economists.

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    Agricultural and Food Policy;

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