Can a Weather-Based Crop Insurance Scheme Increase the Technical Efficiency of Smallholders? A Case Study of Groundnut Farmers in India

K. Nirmal Ravi Kumar and Suresh Chandra Babu
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K. Nirmal Ravi Kumar: Department of Agricultural Economics, Acharya NG Ranga Agricultural University (ANGRAU), Guntur 522101, Andhra Pradesh, India
Suresh Chandra Babu: International Food Policy Research Institute, Washington, DC 20005, USA

Sustainability, 2021, vol. 13, issue 16, 1-15

Abstract: This paper analyzes the impact of a Weather-Based Crop Insurance Scheme (WBCIS) on the Technical Efficiency (TE) of smallholder groundnut farmers in the context of climate change in India. We use Data Envelopment Analysis (DEA) to study the TE of smallholder farmers, which range between 0.58 and 1, with a mean of 0.79. Using the Propensity Score Matching (PSM) technique, we find that the TE of smallholder farmers improves when they participate in a WBCIS using three matching methods. Increasing the coverage of farmers under a WBCIS can help in reducing smallholder farmers vulnerability to climate change.

Keywords: climate change; Technical Efficiency; Data Envelopment Analysis; Weather-Based Crop Insurance Scheme; Propensity Score Matching; India (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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