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Does bundling crop insurance with certified seeds crowd-in investments? Experimental evidence from Kenya

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  • Bulte, Erwin
  • Cecchi, Francesco
  • Lensink, Robert
  • Marr, Ana
  • Van Asseldonk, Marcel

Abstract

We use a randomised experiment in Kenya to analyse how smallholder farmers respond to receiving a free hybrid crop insurance product, conditional on purchasing certified seeds. We find that farmers increase effort—increasing total investments and taking more land in production. In addition to adopting more certified seeds, they also invest more in complementary inputs such as fertilizer and hired-in farm-machinery and non-farm labour. We find limited evidence of a change in farming intensity. For example, there is no evidence of ‘crowding-out’ of effort or inputs on a per-hectare basis, even if the indemnity-based component of the insurance product potentially gives rise to asymmetric information problems (moral hazard). We also document that ex post willingness to pay for the insurance product has increased for the treatment group. This suggests that learning about the benefits of (subsidized) insurance outweighs any anchoring effects on the zero price during the pilot study.

Suggested Citation

  • Bulte, Erwin & Cecchi, Francesco & Lensink, Robert & Marr, Ana & Van Asseldonk, Marcel, 2019. "Does bundling crop insurance with certified seeds crowd-in investments? Experimental evidence from Kenya," Greenwich Papers in Political Economy 23788, University of Greenwich, Greenwich Political Economy Research Centre.
  • Handle: RePEc:gpe:wpaper:23788
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    Cited by:

    1. Chowdhury, Shyamal & Smits, Joeri & Sun, Qigang, 2020. "Contract Structure, Time Preference, and Technology Adoption," IZA Discussion Papers 13590, Institute of Labor Economics (IZA).
    2. Kelvin Mashisia Shikuku & Ibrahim Ochenje, 2025. "Impact of index insurance on downside income risk: Evidence from northern Kenya," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 47(2), pages 863-891, May.
    3. Chowdhury, Shyamal & Smits, Joeri & Sun, Qigang, 2020. "Contract structure, time preference, and technology adoption," GLO Discussion Paper Series 633, Global Labor Organization (GLO).
    4. Kramer, Berber & Waweru, Carol & Cecchi, Francesco & Kivuva, Benjamin & Waithaka, Lilian, 2024. "See It Grow: A randomized evaluation of digital innovations in crop insurance to increase insurance and fertilizer demand in Kenya," 2024 Annual Meeting, July 28-30, New Orleans, LA 343861, Agricultural and Applied Economics Association.
    5. repec:ags:aaea22:343861 is not listed on IDEAS
    6. Olga Mapanje & Selma Karuaihe & Charles Machethe & Mao Amis, 2023. "Financing Sustainable Agriculture in Sub-Saharan Africa: A Review of the Role of Financial Technologies," Sustainability, MDPI, vol. 15(5), pages 1-20, March.
    7. Cecchi, Francesco & Lensink, Robert & Slingerland, Edwin, 2024. "Ambiguity attitudes and demand for weather index insurance with and without a credit bundle: experimental evidence from Kenya," Journal of Behavioral and Experimental Finance, Elsevier, vol. 41(C).
    8. Jonas R. Jahnert & Hato Schmeiser & Florian Schreiber, 2022. "Pricing strategies in the German term life insurance market: An empirical analysis," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(1), pages 19-34, April.
    9. Belissa, Temesgen K. & Lensink, Robert & Marr, Ana, 2025. "The impact of bundling index insurance with credit and input vouchers: Experimental evidence from Ethiopia," Journal of Economic Behavior & Organization, Elsevier, vol. 234(C).
    10. Adelesi, Opeyemi Obafemi & Kim, Yean-Uk & Schuler, Johannes & Zander, Peter & Njoroge, Michael Murithi & Waithaka, Lilian & Abdulai, Alhassan Lansah & MacCarthy, Dilys Sefakor & Webber, Heidi, 2024. "The potential for index-based crop insurance to stabilize smallholder farmers' gross margins in Northern Ghana," Agricultural Systems, Elsevier, vol. 221(C).
    11. Van Campenhout, Bjorn & Abate, Gashaw T. & Colen, Liesbeth & Kramer, Berber, 2025. "Signaling, screening, or sunk costs? Experimental evidence on how prices affect agricultural technology adoption in East Africa," IFPRI discussion papers 2369, International Food Policy Research Institute (IFPRI).
    12. Castaing, Pauline & Gazeaud, Jules, 2025. "Do index insurance programs live up to their promises? Aggregating evidence from multiple experiments," Journal of Development Economics, Elsevier, vol. 175(C).
    13. Mitra, Archisman & Bouwer, Roy & Balasubramanya, Soumya & Taron, Avinandan, 2022. "Willingness to pay for bundled agricultural insurance products – results from a discrete choice experiment in Bihar, India," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322159, Agricultural and Applied Economics Association.
    14. Ben Brunckhorst & Ruth Hill & Ghazala Mansuri & Trang Nguyen & Miki Doan, 2023. "Climate and Equity," World Bank Publications - Reports 39952, The World Bank Group.
    15. Yu Xiao & Caiyan Yang & Lu Zhang, 2024. "The Impact of a Full-Cost Insurance Policy on Fertilizer Reduction and Efficiency: The Case of China," Agriculture, MDPI, vol. 14(9), pages 1-18, September.
    16. Nshakira-Rukundo, Emmanuel & Kamau, Juliet Wanjiku & Baumüller, Heike, 2021. "Determinants of uptake and strategies to improve agricultural insurance in Africa: a review," Environment and Development Economics, Cambridge University Press, vol. 26(5-6), pages 605-631, October.
    17. Njuguna, Evelyne & Daum, Thomas & Birner, Regina & Mburu, John, 2025. "Silicon Savannah and smallholder farming: How can digitalization contribute to sustainable agricultural transformation in Africa?," Agricultural Systems, Elsevier, vol. 222(C).
    18. Laura Moritz & Lena Kuhn & Ihtiyor Bobojonov, 2025. "The Impact of Agricultural Index Insurance on Farmers' Welfare and Climate Resilience: Findings From Uzbekistan," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 69(3), pages 598-610, July.
    19. Patil, Vikram & Veettil, Prakashan Chellattan & Yashodha, Yashodha, 2021. "Understanding Farmers’ Low Uptake of Crop Insurance in India: A Discrete Choice Experiment Approach," 2021 Conference, August 17-31, 2021, Virtual 315232, International Association of Agricultural Economists.

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    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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