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Are subsidies to weather-index insurance the best use of public funds? A bio-economic farm model applied to the Senegalese groundnut basin

Author

Listed:
  • Aymeric Ricome

    (JRC - European Commission - Joint Research Centre [Ispra])

  • François Affholder

    (Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)

  • Françoise Gérard

    (UPR GREEN - Gestion des ressources renouvelables et environnement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)

  • Bertrand Muller

    (LEPSE - Écophysiologie des Plantes sous Stress environnementaux - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

  • Charlotte Poeydebat

  • Philippe Quirion

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique)

  • Moussa Sall

    (ISRA - Institut sénégalais de recherches agricoles [Dakar])

Abstract

While crop yields in Sub-Saharan Africa are low compared to most other parts of the world, weather-index insurance is often presented as a promising tool, which could help resource-poor farmers in developing countries to invest and adopt yield-enhancing technologies. Here, we test this hypothesis on two contrasting areas (in terms of rainfall scarcity) of the Senegalese groundnut basin through the use of a bio-economic farm model, coupling the crop growth model CELSIUS with the economic model ANDERS, both specifically designed for this purpose. We introduce a weather-index insurance whose index is currently being used for pilot projects in Senegal and West Africa. Results show that insurance leads to a welfare gain only for those farmers located in the driest area. These farmers respond to insurance mostly by increasing the amount of cow fattening, which leads to higher crop yields thanks to the larger production of manure. We also find that subsidizing insurance is not the best possible use of public funds: for a given level of public funding, reducing credit rates, subsidizing fertilizers, or just transferring cash as a lump-sum generally brings a higher expected utility to farmers and leads to a higher increase in grain production levels.

Suggested Citation

  • Aymeric Ricome & François Affholder & Françoise Gérard & Bertrand Muller & Charlotte Poeydebat & Philippe Quirion & Moussa Sall, 2017. "Are subsidies to weather-index insurance the best use of public funds? A bio-economic farm model applied to the Senegalese groundnut basin," Post-Print hal-01679763, HAL.
    • Handle: RePEc:hal:journl:hal-01679763
    DOI: 10.1016/j.agsy.2017.05.015
    Note: View the original document on HAL open archive server: https://hal.science/hal-01679763v1
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    Cited by:

    1. Stoeffler, Quentin & Opuz, Gülce, 2022. "Price, information and product quality: Explaining index insurance demand in Burkina Faso," Food Policy, Elsevier, vol. 108(C).
    2. Grillot, Myriam & Vayssières, Jonathan & Masse, Dominique, 2018. "Agent-based modelling as a time machine to assess nutrient cycling reorganization during past agrarian transitions in West Africa," Agricultural Systems, Elsevier, vol. 164(C), pages 133-151.
    3. Lairez, Juliette & Jourdain, Damien & Lopez-Ridaura, Santiago & Syfongxay, Chanthaly & Affholder, François, 2023. "Multicriteria assessment of alternative cropping systems at farm level. A case with maize on family farms of South East Asia," Agricultural Systems, Elsevier, vol. 212(C).
    4. Kuhn, Lena & Bobojonov, Ihtiyor, 2024. "How sustainable is premium subsidization for index insurance? - A quantitative impact analysis along a global program database," GEWISOLA 64th Annual Conference, Giessen, Germany, September 25–27, 2024 364721, GEWISOLA.
    5. Gbegbelegbe, Sika & Alene, Arega & Swamikannu, Nedumaran & Frija, Aymen, 2021. "Multi-Dimensional Impact Assessment of Agricultural Technologies: An Application of TOPSIS for Dryland Cereals and Grain Legumes," 2021 Conference, August 17-31, 2021, Virtual 315281, International Association of Agricultural Economists.
    6. Falconnier, Gatien N. & Leroux, Louise & Beillouin, Damien & Corbeels, Marc & Hijmans, Robert J. & Bonilla-Cedrez, Camila & van Wijk, Mark & Descheemaeker, Katrien & Zingore, Shamie & Affholder, Franç, 2023. "Increased mineral fertilizer use on maize can improve both household food security and regional food production in East Africa," Agricultural Systems, Elsevier, vol. 205(C).
    7. Müting, Luisa & Mußhoff, Oliver, 2025. "Money doesn't grow on trees – Or does it? How agroforestry system design makes agroforestry more attractive to smallholders in Senegal," Agricultural Systems, Elsevier, vol. 224(C).
    8. Bonoua Faye & Guoming Du, 2021. "Agricultural Land Transition in the “Groundnut Basin” of Senegal: 2009 to 2018," Land, MDPI, vol. 10(10), pages 1-17, September.
    9. Leroux, L. & Falconnier, G.N. & Diouf, A.A. & Ndao, B. & Gbodjo, J.E. & Tall, L. & Balde, A.A. & Clermont-Dauphin, C. & Bégué, A. & Affholder, F. & Roupsard, O., 2020. "Using remote sensing to assess the effect of trees on millet yield in complex parklands of Central Senegal," Agricultural Systems, Elsevier, vol. 184(C).
    10. 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.

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