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Risk Management for Smallholder Farmers: An Empirical Study on the Adoption of Weather-Index Crop Insurance in Rural Kenya

Author

Listed:
  • Keiko Fukumori
  • Ayumi Arai
  • Tomoya Matsumoto

Abstract

This study examines the determinants of smallholder farmers’ adoption of weather-index crop insurance, which is considered to be a promising means of mitigating the negative welfare impacts of crop loss caused by drought or excess rainfall. The study utilizes household survey data covering 495 smallholder farmers in rural Kenya. It finds that a better understanding of insurance, together with a significant positive effect of years of education, considerably increases insurance uptake. The evidence suggests that it is important to provide educational programs on new financial products when introducing such products to smallholder farmers. However, it also shows the limitations of this study by revealing how important proper study design is to draw reliable methodological impact evaluations.

Suggested Citation

  • Keiko Fukumori & Ayumi Arai & Tomoya Matsumoto, 2022. "Risk Management for Smallholder Farmers: An Empirical Study on the Adoption of Weather-Index Crop Insurance in Rural Kenya," Working Papers 230, JICA Research Institute.
    • Handle: RePEc:jic:wpaper:230
    DOI: 10.18884/00001062
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    References listed on IDEAS

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    More about this item

    Keywords

    agriculture; weather risk; weather-index insurance; rural households; Kenya; JEL (O12; O13; O33; G22);
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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