Risk Management for Smallholder Farmers: An Empirical Study on the Adoption of Weather-Index Crop Insurance in Rural Kenya

Keiko Fukumori, Ayumi Arai and Tomoya Matsumoto

No 230, Working Papers from JICA Research Institute

Abstract: This study examines the determinants of smallholder farmers’ adoption of weather-index crop insurance, which is considered to be a promising means of mitigating the negative welfare impacts of crop loss caused by drought or excess rainfall. The study utilizes household survey data covering 495 smallholder farmers in rural Kenya. It finds that a better understanding of insurance, together with a significant positive effect of years of education, considerably increases insurance uptake. The evidence suggests that it is important to provide educational programs on new financial products when introducing such products to smallholder farmers. However, it also shows the limitations of this study by revealing how important proper study design is to draw reliable methodological impact evaluations.

Keywords: agriculture; weather risk; weather-index insurance; rural households; Kenya; JEL (O12; O13; O33; G22) (search for similar items in EconPapers)
Date: 2022-04
New Economics Papers: this item is included in nep-agr, nep-dev, nep-env, nep-ias and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:jic:wpaper:230

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