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Maize Farmers’ Willingness to Pay for Weather Index Insurance in Nsawam Adoagyiri Municipality

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  • Elliott Alvin Bartrop-Sackey

Abstract

Agriculture in Ghana is dominantly dependent on rainfall and hence putting farmers at a high risk of crop failure due to the unpredictability of weather conditions. This is a chronic problem for farmers as annual crop failure puts farmers at the risk of poverty. The objectives of this study were to determine the level of awareness of weather index insurance among farmers; to estimate the average amount these farmers are willing to pay as premium for weather index insurance; and to examine the factors that influence their willingness to pay for weather index insurance. The study is based on a survey of 100 maize farmers sampled from ten communities located in one of Ghana’s local government areas—Nsawam Adoagyiri Municipality. Bivariate descriptive analytical tools, as well as multivariate regressions models, were employed for inference. Specifically, for the regression models, Ordinary Least Squares (OLS) and Tobit regressions were used. The results showed that only 15% of the maize farmers were aware of weather index insurance, but 93% of the sampled maize farmers were willing to pay for the facility. Maize farmers were willing to pay a mean amount of about GHC229 per acre annually. The results further show that being a male, the level of on-farm income and previous disaster experience were positively correlated with willingness to pay for weather index insurance. Also, I found that farm size and having a secondary occupation are negatively correlated with the willingness to pay for weather index insurance. Given the low levels of awareness of weather index insurance but a positive attitude towards the facility as shown through the willingness to pay for the facility, the study recommends that more effort be devoted by the Ministry of Food and Agriculture at the district level towards educating farmers. The Ministry could also link insurers to the farmers to help mitigate the risk of crop failure.

Suggested Citation

  • Elliott Alvin Bartrop-Sackey, 2020. "Maize Farmers’ Willingness to Pay for Weather Index Insurance in Nsawam Adoagyiri Municipality," Miscellaneous Publications 358325, University of Ghana, Institute of Statistical Social & Economic Research (ISSER).
    • Handle: RePEc:ags:miscgh:358325
    DOI: 10.22004/ag.econ.358325
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    References listed on IDEAS

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