Willingness to Pay for Insured Loans in Northern Ghana

Richard Gallenstein, Khushbu Mishra, Abdoul Sam and Mario Miranda ()

No 205696, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: Index insurance has been heralded as a potential solution to systemic risks faced by smallholder farmers in developing countries by covering risks such as drought, low crop yields, and low market prices. Despite its potential, demand has remained low in many early experiments and field trials. Little research has been done, however, on demand for insurance as it is coupled with other services such as loans. Here, willingness to pay for drought index insurance backed loans is investigated using contingent valuation methodology. Results demonstrate that on average the sample population has a willingness to pay high enough to sustain a market viable insured loan product without subsidization with 56% of the target population expressing a willingness to pay for an insured loan at the market price. Results also show a positive and significant WTP for individual policies and to avoid basis risk resulting from rainfall measurement.

Keywords: Agricultural Finance; Demand and Price Analysis; International Development; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 26
Date: 2015
New Economics Papers: this item is included in nep-dcm, nep-ias and nep-mfd
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:205696

DOI: 10.22004/ag.econ.205696

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