This study from Ghana investigates the willingness to pay (WTP) for index-based drought insurance coupled with agricultural loans by product design and gender, using a contingent valuation method.
In Ghana, insured loans increased farmers' likelihood of receiving credit by between 15 and 21 percentage points. There was no impact on the likelihood that farmers apply for credit but there was an increase in the likelihood of loan approvals of between 17 and 25 percentage points.
This study from Ghana found that index insurance lowers overall demand for agricultural loans while farmers appear to prefer micro-level insurance over meso‐level insurance. The study also shows that farmers are willing to pay to avoid basis risk.
This article investigates the impact of insurance backed contingent credit on demand for credit and investment decisions using a framed field experiment conducted in rural Tanzania.
Increasing agricultural efficiency via technology adoption remains a high priority among development practitioners. One potential tool for furthering this objective is using drought index insurance to increase access to credit.
