Concept and Unintended Consequences of Weather Index Insurance: The Case of Mexico

Abstract

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Explorations in the Environment–Development Dilemma

“…In particular, their conclusions are in line with other papers emphasizing detrimental effects of such promising devices (see e.g. Fuchs and Wolff 2011), and therefore call for further investigation.…”

Drought insurance for agricultural development and food security in dryland areas

“…They assume therefore that the farmers are weather index insured and that the WII creates disincentives to invest in (i) other non-insured crops leading to potential overspecialization and mono-cultures and (ii) irrigation systems because only rain-fed farmers are insured. (Fuchs and Wolff 2011) These arguments hinge on the assumption that farmers actually feel they are insured. In fact, an external evaluation of the programme (Mexican Ministry of Agriculture 2009) finds only that those farmers that have received payouts "incorporated" those payouts into their production decisions.…”

Weather index insurance for managing drought risk in smallholder agriculture: lessons and policy implications for sub-Saharan Africa

“…7 Without claiming to be complete or exhaustive, these case studies highlight experiences and challenges in testing and scaling weather index instruments in the sub-Saharan Africa region and complement an increasing body of literature on weather index insurance across different regions (Mahul and Stutley 2010;Fuchs and Wolf 2012;Mahul et al 2012). Particularly, the results from recent pilot projects in Ethiopia that integrate weather index insurance with safety nets are important additions (Brans et al 2010;OA 2010OA , 2013.…”

“…11 For example, the Agricultural Insurance Simulation Model (AISM) was developed to model the relationship between weather conditions and crop yields in Mexico. The model consists of a system of equations representing the crop-soil-weather relationship taking into account the specifics of each agronomic climate region and determines the critical threshold values of the index below which the indemnity payments are triggered (Fuchs and Wolf 2012).…”