Weather Index Insurance and Input Intensification: Evidence from Smallholder Farmers in Kenya

Price Amanya Muleke (), Yueqing Ji, Yongyi Fu and Shadrack Kipkogei
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Price Amanya Muleke: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China
Yueqing Ji: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China
Yongyi Fu: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China
Shadrack Kipkogei: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China

Sustainability, 2025, vol. 17, issue 11, 1-21

Abstract: Climate variability intensifies weather risks across smallholder rainfed farming systems in Africa. Farmers often respond by minimizing the use of modern inputs and opting for low-cost traditional practices, a strategy that decreases average yields and perpetuates poverty. While crop insurance could incentivize greater adoption of inputs, indemnity-based programs face market failures. Weather index insurance (WII), which utilizes objective weather data to trigger payouts while addressing traditional crop insurance market failures, is a viable solution. However, empirical evidence on the impact of WII remains limited, with most studies relying on controlled experiments or hypothetical scenarios that overlook real-world adoption dynamics. This study analyzed observational data from 400 smallholder farmers across diverse agroecological zones in Njoro Sub-County, Kenya, using instrumental variable regression to evaluate the impact of weather index insurance (WII) on input adoption and intensity of use. Findings indicated that WII significantly increased the adoption and intensification of improved inputs while displacing traditional practices, with effects moderated by gender, financial access, and infrastructure. Specifically, active WII users applied 28.7 kg/acre more chemical fertilizer and used 2.6 kg/acre more hybrid maize seeds while reducing manure and traditional seed usage by 27 kg/acre and 2.9 kg/acre, respectively. However, the effectiveness of WII was context-dependent, varying under extreme drought conditions and in high-fertility soils, which directly affected resilience outcomes. These findings suggest that policies should combine insurance with targeted agroecological practices and complementary measures, such as improved access to credit and gender-sensitive extension programs tailored to the specific needs of women farmers, to support sustainable agricultural transformation.

Keywords: weather index insurance; input intensification; smallholder farmers; climate resilience (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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