Pairing drought-tolerant maize (DTM) and index insurance generated resilience in two ways. DTM effectively maintained yields during mid-season droughts. After severe droughts, DTM bundled with insurance helped farmers recover from their losses and return production to even higher levels than in the year before the drought.
A temporary “learning” subsidy for commercially sourced fertilizers could help to expand the reach of Kenya's subsidy programs while supporting the commercial markets that will sustain long-term adoption.
In Tanzania, an experimental game found that a hybrid microloan with a 20% individual collateral increased individual effort and repayment for group loans while reducing the number of farmers who choose to borrow.
In recent years, economists have evolved a theory of poverty traps in ways that have changed how we think about creating opportunity for those in desperate need, suggesting new directions that could indeed lead us to the global end of poverty.
A randomized controlled trial (RCT) in Burkina Faso showed that farmers who purchased insurance made significantly more investments for higher future income despite implementation challenges, adding evidence for the high potential of agricultural index insurance for development.
Households have no way to tell whether an index insurance contract will leave them worse off than having no insurance at all. A Minimum Quality Standard (MQS) for index insurance would help to secure vulnerable households and to safeguard markets for future higher-quality contracts.
A resilience-based approach to social protection that includes insurance is the only sustainable way to manage poverty in the long-term. However, even this approach will fail if worst-case climate change scenarios come to pass.
The study on a hypothetical area yield index insurance contract in Ecuador found that for most farmers in the sample, the area yield index insurance would have performed equally well or much better at the same dollar-for-dollar cost compared to the existing conventional insurance contract.
Improving index insurance products, contract design, marketing and policy can contribute to delivering on its promise of promoting independence, prosperity and resilience among these smallholder farmers.