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Extreme weather and demand for index insurance in rural India

Author

Listed:
  • Benedikte Bjerge
  • Neda Trifkovic

Abstract

Index insurance appeared recently in developing countries with the expectation to improve agricultural output and living standards in general. We investigate how experiencing extreme weather events affects farmers’ decision to purchase index insurance in India. Extreme weather events are identified from historical precipitation data and matched with a randomised household panel. Excessive rainfall in previous years during the harvest increases the insurance demand, while lack of rainfall in the planting and growing periods has no effect. The latter can be explained by access to irrigation, underscoring the importance of the local context when developing insurance products to accommodate environmental risks.

Suggested Citation

  • Benedikte Bjerge & Neda Trifkovic, 2018. "Extreme weather and demand for index insurance in rural India," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 45(3), pages 397-431.
    • Handle: RePEc:oup:erevae:v:45:y:2018:i:3:p:397-431.
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    File URL: http://hdl.handle.net/10.1093/erae/jbx037
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    Citations

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    Cited by:

    1. Ashu Tiwari & Archana Patro, 2018. "Memory, Risk Aversion, and Nonlife Insurance Consumption: Evidence from Emerging and Developing Markets," Risks, MDPI, vol. 6(4), pages 1-17, December.
    2. Yuyuan Che & Hongli Feng & David A. Hennessy, 2020. "Recency effects and participation at the extensive and intensive margins in the U.S. Federal Crop Insurance Program," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 52-85, January.
    3. Erwin Bulte & Rein Haagsma, 2021. "The Welfare Effects of Index-Based Livestock Insurance: Livestock Herding on Communal Lands," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 587-613, April.
    4. Zhuoxin Liu & Laijun Zhao & Chenchen Wang & Yong Yang & Jian Xue & Xin Bo & Deqiang Li & Dengguo Liu, 2019. "An Actuarial Pricing Method for Air Quality Index Options," IJERPH, MDPI, vol. 16(24), pages 1-19, December.
    5. repec:ags:aaea22:335586 is not listed on IDEAS
    6. repec:ags:aaea22:335439 is not listed on IDEAS
    7. Mogge, Lukas, 2023. "A District-Level Analysis of the Effect of Risk Exposure on the Demand for Index Insurance in Mongolia," Ruhr Economic Papers 1018, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Fluhrer, Svenja, 2023. "Crowding-in or crowding-out: The effect of humanitarian aid on households’ investments in climate adaptation," MPRA Paper 117975, University Library of Munich, Germany.
    9. Valentina Hartarska & Jingfang Zhang & Denis A. Nadolnyak, 2023. "Scope economies from rural and urban microfinance services," Southern Economic Journal, John Wiley & Sons, vol. 89(4), pages 1138-1167, April.
    10. Barnes, Stephen & Joshi, Swarup & Terrell, Dek, 2023. "Disasters and health insurance: Evidence from Louisiana," Economic Modelling, Elsevier, vol. 128(C).

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