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Willingness to pay for Weather Based Crop Insurance in Punjab

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  • K.S. , A.
  • Khan, T.
  • Kishore, A.

Abstract

Crop insurance is one of the important risk management strategies adopted by farmers. However, one of the biggest challenge Government faces while promoting insurance is in setting optimum premium for crop insurance which can achieve higher participation of farmers in Insurance programme. With premium rate set at 1.5% of sum insured for wheat crop, are the farmers are willing to pay the premium at this rate to insure their wheat crop? It would be interesting to investigate this question in state like Punjab which has not implemented crop insurance. We conducted a Contingent Valuation Study to elicit Willingness to Pay (WTP) for crop insurance of wheat farmers in Punjab state. The sample consisted of 617 wheat farmers spread across 60 villages of 12 districts in Punjab. We found that it is farmers who has suffered crop loss in the past found to have higher WTP. Asset worthy farmers, banking literacy, extension contact was also found to have positive impact on WTP. The study indicated that WTP for crop insurance is around Rs 297 / acre, which is less than the existing rate of premium which is approximately Rs. 400 /acre (premium rate of 1.5%). Acknowledgement :

Suggested Citation

  • 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.
    • Handle: RePEc:ags:iaae18:277516
    DOI: 10.22004/ag.econ.277516
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    1. Islam, Md Din II & Rahman, Airin & Sarker, M. Sazzadur Rahman & Luo, Jianchao & Liang, Hu, 2021. "Factors affecting farmers' willingness to adopt crop insurance to manage disaster risk: evidence from Bangladesh," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(3), April.

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