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Impact of Weather Insurance on Small Scale Farmers: A Natural Experiment

Author

Listed:
  • Stephan Dietrich

    (Georg-August-University Göttingen)

  • Marcela Ibanez

    (Georg-August-University Göttingen)

Abstract

This paper explores the impacts of traditional agricultural insurance that offers protection against climatic shocks on small-scale tobacco farmers in Colombia. We analyze the impacts of access to the insurance on household financial outcomes after a period of severe climatic events that caused substantial crop failures. Our identification strategy benefits from a natural experimental setup of the form in which the insurance was launched. We find that tobacco producers with access to the insurance program were less likely to acquire informal loans, were less likely to use loans to repay debts, and had access to loans with lower interest rates and longer maturation periods. Moreover, access to this program was positively associated with increased savings and accumulation of liquid assets.

Suggested Citation

  • Stephan Dietrich & Marcela Ibanez, 2015. "Impact of Weather Insurance on Small Scale Farmers: A Natural Experiment," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 165, Courant Research Centre PEG.
  • Handle: RePEc:got:gotcrc:165
    as

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    File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_165.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Insurance; Credit; Natural Disasters; Risk Management; Colombia;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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