EconPapers    
Economics at your fingertips  
 

Welfare Impacts of Index Insurance in the Presence of a Poverty Trap

Sommarat Chantarat (), Andrew G. Mude, Christopher Barrett () and Calum Turvey ()

World Development, 2017, vol. 94, issue C, 119-138

Abstract: This paper evaluates the welfare impacts of an index-based livestock insurance designed to compensate for satellite-based predicted livestock mortality in northern Kenya, where previous work has established the presence of poverty traps. We simulate household wealth dynamics based on rich panel and experimental data. The bifurcated livestock dynamics associated with the poverty trap gives rise to insurance valuation that is highly nonlinear in herd size. Estimated willingness to pay among vulnerable groups who most need insurance is, on average, lower than commercially viable rates. Targeted premium subsidization nonetheless appears to offer more cost-effective poverty reduction than need-based direct transfers.

Keywords: index insurance; asset risk; poverty traps; safety net; risk preference elicitation; Kenya (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305750X16305988
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Welfare Impacts of Index Insurance in the Presence of a Poverty Trap (2016) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:94:y:2017:i:c:p:119-138

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-12-06
Handle: RePEc:eee:wdevel:v:94:y:2017:i:c:p:119-138