From Risk to Resilience: Willingness-to-Pay for Crop Insurance Among Paddy Farmers in the Kurunegala District, Sri Lanka

Agriculture is one of the many sectors facing significant risks from climate change. To manage potential crop losses, whether climate-related or not, farmers widely rely on crop insurance to increase their resilience. However, farmers in Sri Lanka demonstrate a limited acceptance of crop insurance schemes. This study aimed to investigate the perceptions and Willingness-to-Pay (WTP) for crop insurance schemes among the paddy farmers in Kurunegala district. A total of 248 paddy farmers from the Kurunegala district were recruited as the study sample using the stratified random sampling approach. A pre-tested structured questionnaire and choice cards were used for primary data collection. The Conditional Logit Model (CLM) was used for data analysis. Around 77.8% of respondents were males engaged only in paddy farming, while the majority (62.5%) received an income of LKR 50,000 to 75,000. Complications experienced during the claim form-filling process (mean = 4.6), gaps in covering all crops on the crop land (mean = 4.6), and poor service quality (mean = 4.5) were perceived as the major limitations in existing crop insurance schemes. Outcomes of the CLM indicated that farmers with a positive attitude toward crop insurance significantly prefer plans with drought coverage (β = 0.823; p < 0.05), on-field assessments (β = 0.251; p < 0.05), and higher no-hazard returns (β = 0.318; p < 0.05) while showing a notable sensitivity to premium costs (β = −0.590; p < 0.05). The model also revealed an apparent willingness to switch from the status quo when presented with better-designed alternatives. The findings emphasized the need to implement responsive crop insurance schemes to enhance climate resilience and ensure the sustainability of paddy production in Sri Lanka.