Abstract:
The effects of climate change on agricultural production are pushing countries to
reconsider risk management policies in their development plans. Opportunities
exist to increase agricultural production and improve the policy environment.
However, policymakers lack local empirical evidence to provide local solutions to
agricultural development in many developing countries, including Togo. This paper
assesses farmers’ willingness to pay for weather index-based insurance (WII) as a
market option for sharing climatic risks. A choice modeling approach is used based
on data collected from 704 randomly selected households in northern Togo, West
Africa. Statistical analysis of the data shows that dry spells are the major concern of
farmers and maize is perceived as the most affected food crop. Results also indicate
that respondents are willing to participate in a WII market and would prefer
insuring crops, such as maize over sorghum and rice against drought by paying on
average about $14.5 per hectare. The results show that WII should not be offered
standalone, but interlinked with other factors such as providing drought tolerant
and high yielding varieties; loans to organized farmers’ groups; and weather
information through TV, radio and mobile phones in local languages, while
encouraging education to enable the diffusion of more advisory services. These
factors are likely to influence positively farmers’ preferences in participating in a WII
market.
