Stated and realized demand for parametric rainfall insurance among rice farmers in Vietnam

Lukas Mogge, Julian Roeckert, Emmanuel Nshakira Rukundo and Kati Krähnert

No 1220, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: We study stated and realized demand for a new parametric insurance product against excessive rainfall among rice farmers in Vietnam's Mekong Delta, a region highly exposed to climate change. Using a household survey of 3,000 rice-farming households, we elicit willingness to pay (WTP) using a multiple-bounded dichotomous choice approach. Stated demand is substantial: 33% of respondents report a WTP of at least half the market price, and 18% report a WTP equal to or higher than the market price. Stated demand is significantly higher among men, younger respondents, and respondents reporting better self-assessed product understanding. Yet when insurance agents offered the product at a subsidized price below respondents' stated WTP, no respondent purchased it. We discuss mechanisms that may explain this discrepancy between stated and realized demand, including limited incentive compatibility of the WTP elicitation mechanism, changes in valuations, and contextual barriers to insurance adoption.

Keywords: Agriculture; parametric weather insurance; Vietnam; willingness-to-pay (search for similar items in EconPapers)
JEL-codes: G52 O12 Q12 Q14 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:343540

DOI: 10.4419/96973405

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