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Sharing Risk to Avoid Tragedy: Informal Insurance and Irrigation in Village Economies

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  • Karol Mazur

Abstract

I present a model of joint co-operation over irrigation and risk sharing in presence of limited commitment constraints. I estimate the model to the setting of three village economies in rural India. The implied dynamics are validated by non-targeted empirical evidence and show that if access to irrigation can be regulated by villagers, the two institutions reinforce each other. However, if ir¬rigation is non-excludable (as is the case with provision by central authorities), such investments harm local co-operation. Counterfactual experiments quan¬tify mutual reinforcement between the two institutions and gains attainable by replacing the government-owned irrigation.

Suggested Citation

  • Karol Mazur, 2020. "Sharing Risk to Avoid Tragedy: Informal Insurance and Irrigation in Village Economies," CSAE Working Paper Series 2020-19-02, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2020-19-02
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    2. Laszlo Tetenyi & Karol Mazur, 2024. "The Macroeconomic Impact of Agricultural Input Subsidies," Working Papers w202422, Banco de Portugal, Economics and Research Department.
    3. Jan Dhaene & Rodrigue Kazzi & Emiliano A. Valdez, 2024. "Axiomatic characterizations of some simple risk-sharing rules," Papers 2411.06240, arXiv.org, revised Nov 2024.
    4. Jialin Wang & Yanglin Wu & Jiyao Liu & Desheng Zhang, 2025. "Study of the Impact of Agricultural Insurance on the Livelihood Resilience of Farmers: A Case Study of Comprehensive Natural Rubber Insurance," Agriculture, MDPI, vol. 15(15), pages 1-23, August.
    5. Attanasio, Orazio & Meghir, Costas & Mommaerts, Corina & Zheng, Yu, 2025. "Growing apart: Declining within- and across-locality insurance in rural China," Journal of Development Economics, Elsevier, vol. 172(C).
    6. Klaus Deininger & Aparajita Goyal, 2024. "Land Policies for Resilient and Equitable Growth in Africa [Des politiques foncières pour une croissance résiliente et équitable en Afrique - Résumé analytique]," World Bank Publications - Books, The World Bank Group, number 41451, April.
    7. Pietrobon, Davide, 2024. "The dual role of insurance in input use: Mitigating risk versus curtailing incentives," Journal of Development Economics, Elsevier, vol. 166(C).

    More about this item

    Keywords

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    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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