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Recent Advances in the Analyses of Demand for Agricultural Insurance in Developing and Emerging Countries

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  • Williams Ali
  • Awudu Abdulai
  • Ashok K. Mishra

Abstract

Despite the significant risks and uncertainties that farmers in developing and emerging countries face in their production process, efforts at encouraging them to adopt agricultural insurance to mitigate their production risks have mainly yielded little success. This article reviews the recent literature on the demand for agricultural insurance in developing and emerging countries, by presenting the state of uptake, drivers of the demand for it, and the potential welfare gains from it. Our review reveals that while risk aversion is necessary for the demand for agricultural insurance, liquidity constraints, rates of time preference, basis risk, and trust are equally relevant in explaining the demand for insurance in poor countries. An interesting observation is the increasing number of studies that employ randomized control trials to analyze farmers’ uptake of agricultural insurance in developing and emerging countries. Our comprehensive review finds some information gaps in the literature, and we propose some avenues for further research.

Suggested Citation

  • Williams Ali & Awudu Abdulai & Ashok K. Mishra, 2020. "Recent Advances in the Analyses of Demand for Agricultural Insurance in Developing and Emerging Countries," Annual Review of Resource Economics, Annual Reviews, vol. 12(1), pages 411-430, October.
    • Handle: RePEc:anr:reseco:v:12:y:2020:p:411-430
    DOI: 10.1146/annurev-resource-110119-025306
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    2. Freudenreich, Hanna & Musshoff, Oliver, 2022. "Experience of losses and aversion to uncertainty - experimental evidence from farmers in Mexico," Ecological Economics, Elsevier, vol. 195(C).
    3. Hample, Kelsey C, 2021. "Formal insurance for the informally insured: Experimental evidence from Kenya," World Development Perspectives, Elsevier, vol. 22(C).
    4. Marco Rogna & Günter Schamel & Alex Weissensteiner, 2023. "Modelling the switch from hail insurance to antihail nets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(1), pages 118-136, January.
    5. Williams Ali & Awudu Abdulai & Renan Goetz & Victor Owusu, 2021. "Risk, ambiguity and willingness to participate in crop insurance programs: Evidence from a field experiment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 679-703, July.
    6. Ibrahima Sall & Russell Tronstad, 2021. "Simultaneous Analysis of Insurance Participation and Acreage Response from Subsidized Crop Insurance for Cotton," JRFM, MDPI, vol. 14(11), pages 1-20, November.
    7. Birthal, Pratap S. & Hazrana, Jaweriah & Negi, Digvijay S. & Mishra, Ashok K., 2022. "Assessing benefits of crop insurance vis-a-vis irrigation in Indian agriculture," Food Policy, Elsevier, vol. 112(C).

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