Publication database

Research Paper #21 assesses the risk mitigation capacity of weather index-based insurance for cotton growers in Northern Cameroon. It finds that weather index-based insurance is associated with huge basis risk and thus has limited potential for income smoothing. The authors use a tractable definition of basis risk to show that calibrating parameters in sub-regions allows to reduce dramatically basis risk and to avoid non negligible balancing out between distinct geographical zones.

As a consequence of climate change, agriculture in many parts of the world has become a riskier business activity. Given the dependence on agriculture in developing countries, this increased risk has a potentially dramatic effect on the lives of people throughout the developing world especially as it relates to their financial inclusion and sustainable access to capital. Research Paper #7 analyses the relationships between rainfall per crop gestation period and crop yields and studies the likelihood of crop yield losses. It makes recommendations on how this information could be used to develop a trigger for index insurance to help mitigate the financial risks to farmers and lenders who make loans to farmers in Ghana. The paper concludes by describing limitations and challenges that must be overcome in order to develop such risk management tools and by describing the potential for crop loss index insurance based on area crop yield in northern Ghana.