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German farmers' perceived usefulness of satellite-based index insurance - Insights from a transtheoretical model

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  • Nordmeyer, Eike Florenz

Abstract

Index insurance is a promising tool to mitigate drought-related income losses in agriculture. Yet, the basis risk of index insurance based on meteorological observations inhibits farmers’ demand. To reduce the basis risk, the integration of satellite data has received research attention. However, farmers’ perceptions of satellite-based index insurance remain unknown. To derive initial insights into German farmers’ perceived usefulness (PU) of satellite-based index insurance, we surveyed 127 German farmers in a risk management context and applied a modified transtheoretical model of behavioral change (TTMC). This revealed detailed information on German farmers’ PU of satellite-based index insurance and its influencing factors. The results indicate that the average farmer perceives satellite-based index insurance as useful. Particularly, a higher educational level in the agricultural context as well as higher trust in index insurance products increases farmers’ PU. Moreover, higher relative climate-related income losses increase farmers’ PU. The results are of importance to insurers interested in the drivers of farmers’ PU of upcoming satellite-based index insurance and offers a starting point for researchers focusing on acceptance of index insurance and satellite data as well as for further applications of the TTMU.

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  • Nordmeyer, Eike Florenz, 2023. "German farmers' perceived usefulness of satellite-based index insurance - Insights from a transtheoretical model," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334557, Agricultural Economics Society - AES.
    • Handle: RePEc:ags:aesc23:334557
    DOI: 10.22004/ag.econ.334557
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    Risk and Uncertainty; Research and Development/Tech Change/Emerging Technologies;

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