Willingness to pay for crop insurance: a case from citrus farmers in Nepal
Journal of Agribusiness in Developing and Emerging Economies
ISSN: 2044-0839
Article publication date: 23 June 2021
Issue publication date: 22 March 2022
Abstract
Purpose
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/approach
The 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.
Findings
The 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/implications
A 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/value
Only 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.
Keywords
Acknowledgements
This study uses data collected during internship program of Agriculture and Forestry University in collaboration with Prime Minister Agriculture Modernization Project (PMAMP) of the Government of Nepal. We like to thank PMAMP for the support and Agriculture Knowledge Centre and PMAMP offices at Sindhuli, Nepal for the assistance during field study. We also like to thank anonymous reviewers and the editor assigned to this paper.
Citation
Dahal, B.R., Adhikari, S. and Khanal, A.R. (2022), "Willingness to pay for crop insurance: a case from citrus farmers in Nepal", Journal of Agribusiness in Developing and Emerging Economies, Vol. 12 No. 2, pp. 247-261. https://doi.org/10.1108/JADEE-12-2020-0298
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited