Factors affecting farmers’ willingness to purchase weather index insurance in the Hainan Province of China
Abstract
Purpose
The purpose of this paper is to explain the factors affecting farmers’ willingness to purchase weather index insurance for crops in China, in the Province of Hainan, and to also provide additional background information on weather index insurance.
Design/methodology/approach
A survey of 134 farmers was undertaken in Hainan, China, regarding their willingness to purchase weather index insurance. A probit regression model was used, and a number of variables were included to explain willingness of farmers to purchase weather index insurance.
Findings
In total, 11 of 15 variables in the model are found to be statistically significant in explaining farmers’ willingness to purchase weather index insurance.
Research limitations/implications
First, farmers’ interest in weather index insurance may be limited due to basis risk. Second, some farmers may not sufficiently understand weather index insurance and so may not purchase it, and a considerable portion of farmers may also require a subsidy if they are to purchase weather insurance.
Practical implications
Weather index insurance may provide a lower cost alternative than traditional crop insurance, however, basis risk remains a main challenge.
Originality/value
This is the first study to quantitatively study the factors affecting the willingness of farmers to purchase weather index insurance for agriculture in the province of Hainan, China.
Keywords
Citation
Lin, J., Boyd, M., Pai, J., Porth, L., Zhang, Q. and Wang, K. (2015), "Factors affecting farmers’ willingness to purchase weather index insurance in the Hainan Province of China", Agricultural Finance Review, Vol. 75 No. 1, pp. 103-113. https://doi.org/10.1108/AFR-02-2015-0007
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited