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Willingness to pay for crop insurance: a case from citrus farmers in Nepal

Willingness to pay for crop insurance: a case from citrus farmers in Nepal In Nepal, crop insurance is at initial phase. However, since its implementation seven years ago, the adoption rate has been fairly low even with the government's lucrative subsidy on premium. There have been very limited studies on specifics of insurance for different crops, and farmer's acceptability on insurance. This study examines WTP for tree-based insurance, a potential insurance scheme on fruit crops in hilly areas of Nepal.Design/methodology/approachThe authors used a contingent valuation method to estimate farmer's willingness to pay (WTP) premium for insurance. They used a double-bounded dichotomous choice (DBDC) framework to elicit WTP and an interval regression method to estimate the WTP model.FindingsThe authors found that the farmers revealed WTP for tree-based insurance is three times higher than the premium they would pay under government's current subsidy plans of insurance. The authors’ result from interval regression also suggests that the factors such as farm size, farmer's adverse experience about invasive pest and weather, awareness of crop insurance, farming experience, and family involvement in agriculture significantly influence farmers' WTP.Research limitations/implicationsA distinct modality of insurance, like tree-based insurance for fruit crops in mid and high hill areas, may enhance the adoption rate rather than a broad area-based plan generalized for all crops.Originality/valueOnly a few studies have examined specifics of insurance in fruit crop insurance in developing countries. The authors’ estimated WTP factors influencing WTP on citrus fruit-crop insurance in Nepal indicates that there is a scope for extending this insurance program. However, the authors also found that there is a gap in understanding of crop insurance and have limited awareness on the government's subsidy programs among farmers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Agribusiness in Developing and Emerging Economies Emerald Publishing

Willingness to pay for crop insurance: a case from citrus farmers in Nepal

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2044-0839
DOI
10.1108/jadee-12-2020-0298
Publisher site
See Article on Publisher Site

Abstract

In Nepal, crop insurance is at initial phase. However, since its implementation seven years ago, the adoption rate has been fairly low even with the government's lucrative subsidy on premium. There have been very limited studies on specifics of insurance for different crops, and farmer's acceptability on insurance. This study examines WTP for tree-based insurance, a potential insurance scheme on fruit crops in hilly areas of Nepal.Design/methodology/approachThe authors used a contingent valuation method to estimate farmer's willingness to pay (WTP) premium for insurance. They used a double-bounded dichotomous choice (DBDC) framework to elicit WTP and an interval regression method to estimate the WTP model.FindingsThe authors found that the farmers revealed WTP for tree-based insurance is three times higher than the premium they would pay under government's current subsidy plans of insurance. The authors’ result from interval regression also suggests that the factors such as farm size, farmer's adverse experience about invasive pest and weather, awareness of crop insurance, farming experience, and family involvement in agriculture significantly influence farmers' WTP.Research limitations/implicationsA distinct modality of insurance, like tree-based insurance for fruit crops in mid and high hill areas, may enhance the adoption rate rather than a broad area-based plan generalized for all crops.Originality/valueOnly a few studies have examined specifics of insurance in fruit crop insurance in developing countries. The authors’ estimated WTP factors influencing WTP on citrus fruit-crop insurance in Nepal indicates that there is a scope for extending this insurance program. However, the authors also found that there is a gap in understanding of crop insurance and have limited awareness on the government's subsidy programs among farmers.

Journal

Journal of Agribusiness in Developing and Emerging Economies – Emerald Publishing

Published: Mar 22, 2022

Keywords: Crop insurance; Developing economies; Fruit crops; Contingent valuation; Sweet orange; Farmer's WTP

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