The typical challenges of basis risk and low uptake have plagued index insurance products for years, but AMA Innovation Lab researchers are crafting solutions by designing innovations around the structure of the insurance contracts.
In a randomized controlled trial to study the impact of farmers’ knowledge about soil quality, we find that national-level fertilizer recommendations may be both unfit and excessively costly for many farmers.
Our results suggest that enforcement mechanisms can actually damage cooperative behavior as players shift from cooperative harvest strategies to more self-interested ones that lead to the collapse of the shared resource.
A deeper understanding of what causes the poor to be reluctant to plan, save and invest in their future may provide valuable insights into designing interventions that address the source of the problem, not just the symptoms, to create lasting change.
Lack of well-tailored innovations such as suitable hybrid seeds to overcome pest and diseases in mid-altitude areas has been acknowledged as a major shortcoming which could further be associated with inadequate investment in research and development.
On average, AMA Innovation Lab researchers find that after the drought, insurance leads to a 36 percent decrease in sales of remaining livestock, and a 25-percent reduction in household meal consumption.
With new drought tolerant (DT) maize varieties ready to go to market, and with our growing knowledge of how to design effective insurance products for small-scale agriculture, now is an opportune moment to close this critical knowledge gap.