Demand for Complementary Financial and Technological Tools for Managing Drought Risk

Patrick Ward (), David Spielman and David Ortega

No 211909, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: Financial and technological innovations that mitigate weather-related production risks have the potential to greatly benefit farmers in many risk-prone areas. In this study we examine farmers’ preferences for two distinct tools that allow them to manage drought risk: weather index insurance and a recently released drought-tolerant rice variety. We illustrate how these tools can independently address drought risk and demonstrate the additional benefits gained by combining them into a complementary risk management product. Findings indicate that farmers are generally unwilling to adopt the drought-tolerant variety independent of insurance, largely due to a yield penalty under non-drought conditions. When bundled with insurance, however, farmers’ valuation of the variety increases. Farmers value insurance on its own, but even more so when bundled with the drought-tolerant variety. The results provide evidence that farmers value the complementarities inherent in a well-calibrated bundle of risk management tools.

Keywords: Agribusiness; Financial Economics; Land Economics/Use (search for similar items in EconPapers)
Pages: 39
Date: 2015
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Citations: View citations in EconPapers (4)

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https://ageconsearch.umn.edu/record/211909/files/W ... ought%20Risk-404.pdf (application/pdf)

Related works:
Journal Article: Demand for Complementary Financial and Technological Tools for Managing Drought Risk (2020)
Working Paper: Demand for complementary financial and technological tools for managing drought risk (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:211909

DOI: 10.22004/ag.econ.211909

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