Weather Index Insurance and Shock Coping
Weather Index Insurance and Shock Coping
Weather risk and incomplete insurance markets are significant contributors to poverty for rural households in developing countries. Weather index insurance has emerged as a possible tool for overcoming these challenges. This paper provides evidence on the impact of weather index insurance from a pioneering, large-scale insurance program in Mexico. The focus of this analysis is on the ex-post effects of insurance payments. A regression discontinuity design provides find evidence that payments from weather index insurance allow farmers to cultivate a larger land area in the season following a weather shock. Households in municipalities receiving payment also appear to have larger per capita expenditures and income in the subsequent year, although there is suggestive evidence that some of this increase is offset by a decrease in remittances. While the cost of insurance appears to be high relative to the payouts, the benefits exceed the costs for a substantial range of outcomes.
- World Bank United States
CREDIT CONSTRAINT, INFORMATION, INVESTMENT, POOR LIVING, CREDIT MARKET CONSTRAINTS, HOUSEHOLD INCOMES, WEATHER INSURANCE, PROGRAMS, RURAL HOUSEHOLDS, AGRICULTURAL LAND, LOSS, INSURANCE COVERAGE, POOR, LOSSES, AGRICULTURAL PRODUCTION, INCOME, INVESTMENTS, OUTCOMES, INSURANCE POLICIES, LANDHOLDINGS, BASIS RISK, CROWDING OUT, PRIVATE TRANSFERS, COVERAGE, POVERTY, RUNNING WATER, CROP INSURANCE, PER CAPITA INCOME, TRANSACTIONS, HOUSEHOLD EXPENDITURES, COVARIATE SHOCKS, CROPLAND, LOSS RATIO, MARKET CONSTRAINTS, INDEMNITY PAYMENTS, FARMERS, RISK MANAGEMENT, ORGANIZATIONS, 330, LIVESTOCK ASSETS, CONSUMPTION SMOOTHING, REMITTANCE, MARKETS, PREMIUM PAYMENTS, FINANCE, RISK MANAGEMENT STRATEGIES, TRANSFERS, RURAL AREAS, WELFARE, PRODUCTION, GOVERNMENT EXPENDITURES, CONSUMPTION, PREMIUMS, RISK TAKING, THEORY, POVERTY REDUCTION, RISKS, MARKET, DURABLE, RETURN, RURAL POPULATION, DEMAND, CLIMATE CHANGE, INSURANCE POLICY, CREDIT CONSTRAINTS, AGRICULTURAL ECONOMICS, HURRICANES, COSTS OF INSURANCE, UNINTENDED CONSEQUENCES, POLITICAL ECONOMY, RISK SHARING, SMALLHOLDER FARMERS, EXCHANGE, DROUGHT, PUBLIC ECONOMICS, VALUE, RISK, INCOME POVERTY, REMITTANCES, INTERNATIONAL DEVELOPMENT, POLICIES, POLICY, INSURANCE COSTS, FINANCIAL INSTITUTIONS, RATE OF RETURN, INVESTMENT DECISIONS, EFFECTS, INSURANCE, TRANSACTIONS COSTS, HOUSEHOLD INCOME, IMPACT OF HURRICANES, CREDIT, EXPENDITURES, DEVELOPING COUNTRIES, INTERNATIONAL BANK, RISK AVERSE INDIVIDUALS, FUTURE, BENEFITS, MANAGEMENT, DISASTER RISK FINANCING, MICROINSURANCE, ECONOMIC ANALYSIS, ECONOMICS, INDEMNITY, INTEREST, RISK TRANSFER, RURAL, CLIMATE, INSURANCE PREMIUMS, INSURANCE PAYMENTS, INSURANCE MARKETS, CASH TRANSFERS, ECONOMIC IMPACTS, INFORMAL INSURANCE, CREDIT MARKET, EXPENDITURE, RURAL POPULATIONS
CREDIT CONSTRAINT, INFORMATION, INVESTMENT, POOR LIVING, CREDIT MARKET CONSTRAINTS, HOUSEHOLD INCOMES, WEATHER INSURANCE, PROGRAMS, RURAL HOUSEHOLDS, AGRICULTURAL LAND, LOSS, INSURANCE COVERAGE, POOR, LOSSES, AGRICULTURAL PRODUCTION, INCOME, INVESTMENTS, OUTCOMES, INSURANCE POLICIES, LANDHOLDINGS, BASIS RISK, CROWDING OUT, PRIVATE TRANSFERS, COVERAGE, POVERTY, RUNNING WATER, CROP INSURANCE, PER CAPITA INCOME, TRANSACTIONS, HOUSEHOLD EXPENDITURES, COVARIATE SHOCKS, CROPLAND, LOSS RATIO, MARKET CONSTRAINTS, INDEMNITY PAYMENTS, FARMERS, RISK MANAGEMENT, ORGANIZATIONS, 330, LIVESTOCK ASSETS, CONSUMPTION SMOOTHING, REMITTANCE, MARKETS, PREMIUM PAYMENTS, FINANCE, RISK MANAGEMENT STRATEGIES, TRANSFERS, RURAL AREAS, WELFARE, PRODUCTION, GOVERNMENT EXPENDITURES, CONSUMPTION, PREMIUMS, RISK TAKING, THEORY, POVERTY REDUCTION, RISKS, MARKET, DURABLE, RETURN, RURAL POPULATION, DEMAND, CLIMATE CHANGE, INSURANCE POLICY, CREDIT CONSTRAINTS, AGRICULTURAL ECONOMICS, HURRICANES, COSTS OF INSURANCE, UNINTENDED CONSEQUENCES, POLITICAL ECONOMY, RISK SHARING, SMALLHOLDER FARMERS, EXCHANGE, DROUGHT, PUBLIC ECONOMICS, VALUE, RISK, INCOME POVERTY, REMITTANCES, INTERNATIONAL DEVELOPMENT, POLICIES, POLICY, INSURANCE COSTS, FINANCIAL INSTITUTIONS, RATE OF RETURN, INVESTMENT DECISIONS, EFFECTS, INSURANCE, TRANSACTIONS COSTS, HOUSEHOLD INCOME, IMPACT OF HURRICANES, CREDIT, EXPENDITURES, DEVELOPING COUNTRIES, INTERNATIONAL BANK, RISK AVERSE INDIVIDUALS, FUTURE, BENEFITS, MANAGEMENT, DISASTER RISK FINANCING, MICROINSURANCE, ECONOMIC ANALYSIS, ECONOMICS, INDEMNITY, INTEREST, RISK TRANSFER, RURAL, CLIMATE, INSURANCE PREMIUMS, INSURANCE PAYMENTS, INSURANCE MARKETS, CASH TRANSFERS, ECONOMIC IMPACTS, INFORMAL INSURANCE, CREDIT MARKET, EXPENDITURE, RURAL POPULATIONS
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