The Potential for Scale and Sustainability in Weather Index Insurance

THE POTENTIAL FOR SCALE AND SUSTAINABILITY IN WEATHER INDEX INSURANCE
FOR AGRICULTURE AND RURAL LIVELIHOODS
who purchased the products; nor were they examined to determine what, if any,
influence they may have had on farmers’ decisions to plant certain crops, use
different agricultural practices or enter particular markets. There have been a few
studies of farmers’ uptake of index insurance when linked to credit and technology
packages and of the socio-economic determinants of that demand (e.g. Giné,
Townsend and Vickey 2008; Giné and Yang 2008), but there are no ex post impact
studies showing how the insurance has changed farmers’ livelihood strategies and
incomes, or how protecting lives and assets has enabled people to avoid or escape
poverty. With disaster-relief index insurance, the product would need to show that
it is protecting farm assets and incomes during catastrophic events. Impact
pathways would need to extend well beyond demonstrating a demand for
insurance to also show how the insurance has impacted risk-management
behaviour, the choice of land use and technologies, and ultimately how it has
affected incomes, poverty and vulnerability.
57