SPP Colloquium Seminar Series: Demand for Crop Insurance: Evidence From Pakistan

Google map

“Smallholder farmers in South Asia face substantial income risk from climate shocks, yet uptake of crop insurance remains low. We conduct a field experiment with 1,770 farmers across more than 100 villages in Punjab, Pakistan, to study how farmers value different crop insurance contracts and whether better information about climate affects their willingness to buy insurance. We find that farmers are less interested in insurance when payouts do not closely match their own losses, but differences across farmers matter more than differences across contracts. Providing information about historical climate patterns increases willingness to pay, especially among farmers who initially underestimated climate risks. These findings suggest that improving information and trust could play an important role in expanding climate risk protection for farmers.”