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Potential Demand for Drought Insurance in Burkina Faso and Its Determinants

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  • Takeshi Sakurai
  • Thomas Reardon

Abstract

The objectives of this paper are twofold: (a) to estimate demand for formal drought insurance using farm household data in Burkina Faso and (b) to find what determines insurance demand. The following findings are salient. First, effective demand is found in all zones, which implies inadequacies in households' current self-insurance strategies. Second, there is much heterogeneity in the strategies to self-insure even within zones. Third, the expectation of public food aid decreases demand for drought insurance, which suggests that food aid is causing moral hazard. Fourth, households with large livestock holdings can reduce the size of herd by substituting drought insurance for livestock holdings. Copyright 1997, Oxford University Press.

Suggested Citation

  • Takeshi Sakurai & Thomas Reardon, 1997. "Potential Demand for Drought Insurance in Burkina Faso and Its Determinants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1193-1207.
  • Handle: RePEc:oup:ajagec:v:79:y:1997:i:4:p:1193-1207
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