Demand for Complementary Financial and Technological Tools for Managing Drought Risk

Bibliographic Data

ID4360342
AuthorsPatrick S Ward (0000-0001-8793-1200, Duke Kunshan University), David L Ortega (0000-0003-3283-2867, Michigan State University), David J Spielman (0000-0002-6889-7358), Neha Kumar (0000-0001-7982-3277), Sumedha Minocha (Cornell University)
Year2020
Volume68
Issue2
Pages607-653
Publication date2020-01-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueEconomic Development and Cultural Change (JOURNAL)
Journal identifiersISSN: 0013-0079 • E-ISSN: 1539-2988
PublisherUniversity of Chicago Press (PUBLISHER • US)
DOI10.1086/700632
OpenAlexW3023079428
LanguageEN
Citations received2
References cited39

Innovations that mitigate weather-related production risks can potentially benefit farmers in risk-prone areas. We examine two distinct tools for managing drought risk: (1) weather index insurance and (2) a drought-tolerant (DT) rice variety. Although these tools can independently address drought risk, we demonstrate the additional benefits gained by bundling them into a complementary product. Results suggest that farmers are generally unwilling to adopt the DT variety independent of insurance, largely due to a yield penalty under nondrought conditions. When bundled with insurance, however, farmers’ valuation of the variety increases. Farmers value insurance on its own but even more so when it is bundled with the DT variety. We provide evidence that farmers value the complementarities inherent in a well-calibrated bundle of risk management tools

Actuarial science · Agriculture · Business · Crop insurance · Economics · Microeconomics · Product (mathematics) · Production (economics) · Risk analysis (engineering) · Risk management · Risk management tools · Valuation (finance) · Value (mathematics) · Variety (cybernetics) · Yield (engineering) · Agricultural Innovations and Practices · Agricultural risk and resilience · Computer Science · Finance · Income, Poverty, and Inequality

Tools

Open DOISci-Hub