Insurance for Technology Adoption: An Experimental Evaluation of Schemes and Subsidies with Maize Farmers in Mexico

Freudenreich, Hanna; Mußhoff, Oliver

doi:10.1111/1477-9552.12226

Cited by 35 publications

(32 citation statements)

References 76 publications

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“…14 They were told that the exchange rate between the virtual and real currency was £10,000 to £1, meaning that each virtual £10,000 earned would provide a real earning of £1. The use of a virtual currency is widespread in experimental economics, and recent studies implementing contextual framing in agricultural economics have used such a currency (e.g., Meraner et al, 2018;Freudenreich & Mußhoff, 2018).…”

Section: Monetary Incentivesmentioning

confidence: 99%

Eliciting farmers’ subjective probabilities, risk, and uncertainty preferences using contextualized field experiments

Cerroni

2020

Agricultural Economics

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Subjective probabilities as well as risk and uncertainty preferences influence many farmers’ decisions. Few contextualized field experiments were recently conducted to elicit farmers’ risk preferences. Contextualized field experiments use nonabstract framings that are familiar to subjects. Despite adding of context can undermine internal validity, such experiments are increasingly used in applied economics. Contextualized field experiments were never used to elicit farmers’ uncertainty preferences. This paper aims to fill this gap in the literature. This required the development of a new approach in which uncertainty preferences were estimated while controlling for farmers’ subjective probabilities regarding future agricultural outcomes. The experiment involves Scottish farmers’ decisions to plant traditional or new potato varieties. Monetary incentives and incentive compatible elicitation techniques, such as quadratic scoring rules and certainty equivalent multiple price lists, were used. Results from the estimation of Fechner models using maximum likelihood estimation procedures show that failure to control for subjective probabilities generates an underestimation of estimated uncertainty preferences. Farmers are more averse to uncertainty than risk, and their choices are noisier under uncertainty than risk.

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Section: Monetary Incentivesmentioning

confidence: 99%

Eliciting farmers’ subjective probabilities, risk, and uncertainty preferences using contextualized field experiments

Cerroni

2020

Agricultural Economics

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“…For example, Karlan et al (2014) compare the role of credit market inefficiencies and risk market inefficiencies in agricultural input expenditure in Ghana. Freudenreich and Musshoff (2017) investigate the relationship between incomplete risk markets and adoption of higher yielding hybrid maize seed among Mexican farmers. Ali et al (2014) look at how land market failures impact agricultural investment and land conservation techniques in Rwanda.…”

Section: Introductionmentioning

confidence: 99%

The Role of Information in Agricultural Technology Adoption: Experimental Evidence from Rice Farmers in Uganda

Campenhout

2021

Economic Development and Cultural Change

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“…In addition to facilitating recovery, insurance could also alleviate liquidity constraints, thereby allowing the adoption of new technology and practices (Carter and Barrett 2006;Freudenreich and Mußhoff 2018). The proponents of climate risk insurance argue that insurance could facilitate faster recovery by making capital available for re-investment into adaptation measures ( Fig.…”

Section: Linking Risk Management and Risk Transfer To Accelerate Climmentioning

confidence: 99%

“…2a (iv)). Insurance helps in managing short-term climate risk through speedy recovery, while also allowing investors to capitalise on favourable climate outlooks by offering the necessary liquidity to enable re-investment in risk management (prevention and preparation) strategies (Freudenreich and Mußhoff 2018). Positive enabling environments, such as activities that reduce agricultural risk, could allow the private sector to offer more affordable insurance premiums and financial market interest rates, which will be critical in encouraging farmers to purchase insurance contracts (World Bank 2018).…”

Section: Linking Risk Management and Risk Transfer To Accelerate Climmentioning

confidence: 99%

Creating positive synergies between risk management and transfer to accelerate food system climate resilience

et al. 2020

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Climate change will significantly impact the future viability and security of food production systems, with increased frequency and intensity of droughts, floods, storms and other extreme climatic events predicted in many regions. In order for food production systems to remain viable and resilient under a changing climate, novel approaches, which integrate risk management (i.e. adaptation) and risk transfer strategies, such as insurance, are required. We argue that the coordinated integration of risk management and risk transfer approaches will support greater resilience of food production systems under climate change. Conversely, if risk management and risk transfer strategies are not carefully integrated, there is potential to undermine adaptive capacity (e.g. insurance subsidies may dissuade farmers from investing in climate adaptation) and ultimately reduce the capacity of food production systems to cope with and recover from the adverse impacts of climate change. Here we propose a resilience-based conceptual framework for integrating risk management and risk transfer strategies along with four key principles, which we believe could underlie their successful integration and thus enhance food production system resilience under climate change. These are as follows: (1) pro-active investments in farmer climate adaptation rather than re-active disaster relief, (2) structuring of government subsidies around insurance and climate disaster relief to incentivise farmer climate adaptation, (3) rewarding farmer efforts towards climate adaptation with cheaper insurance premiums for those farmers that invest resources into climate adaptation and (4) recognising investments in the integration of farm climate adaptation and risk transfer schemes within the broader context of future climate disaster risk management and global food security. Such an integrated investment approach could substantially reduce future economic losses for farmers while also enhancing food security under climate change.

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Insurance for Technology Adoption: An Experimental Evaluation of Schemes and Subsidies with Maize Farmers in Mexico

Cited by 35 publications

References 76 publications

Eliciting farmers’ subjective probabilities, risk, and uncertainty preferences using contextualized field experiments

Eliciting farmers’ subjective probabilities, risk, and uncertainty preferences using contextualized field experiments

The Role of Information in Agricultural Technology Adoption: Experimental Evidence from Rice Farmers in Uganda

Creating positive synergies between risk management and transfer to accelerate food system climate resilience

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