Area-Based Yield Insurance Pilot Project for Peruvian Coastal Agriculture

Problem & Objective
The potential benefits of agricultural insurance include greater willingness on the part of farmers to carry risk and engage in production strategies with higher returns, as well as increasing the provision of lending to agriculture. However, the design of sustainable insurance products for agriculture is very complicated. This project seeks to test an area-based yield (ARBY) insurance scheme for small and medium sized producers in selected valleys of the Peruvian coast. This ARBY insurance product should give farmers a lower base risk than other types of index-based insurance programs.

Policy Relevance
The Peruvian government has recently approved $30 million to strengthen rural financial markets, with the provision of index-based insurance as a top priority. This project will work with government officials, financial market providers, and the private insurance sector to help develop a product that can be offered to farmers in the market. By assessing the uptake and impact of this pilot project, researchers will be able to inform future activity of the Ministry of Agriculture in Peru.

Publications

• Carter, Michael R., Francisco Galarza and Stephen Boucher. "Underwriting Area-Based Yield Insurance to Crowd-In Credit Supply and Demand." Forthcoming in Savings and Development.

• BASIS Brief no. 2008-07
  Insuring the Never before Insured: Explaining Index Insurance through Financial Education Games, by Michael R. Carter, Christopher B. Barrett, Stephen Boucher, Sommarat Chantarat, Francisco Galarza, John McPeak, Andrew Mude and Carolina Trivelli. October 2008. 8 pages. [Adobe Acrobat 326K].
  
  Spanish version available: Asegurando a los que nunca estuvieron asegurados: Explicando el seguro por índice a través de juegos de educación financiera
  
  
• Underwriting Area-Based Yield Insurance ito Crowd-In Credit Supply and Demand by Michael R. Carter, Francisco Galarza and Stephen Boucher. Forthcoming in Savings and Development. [PDF, 28 pages]




• Project Concept Note December 2007 [PDF, 18 pages]

Spanish version available: Nota Conceptual December 2007 [PDF, 18 pages]

• BASIS Brief No. 46
  Can Insurance Unlock Agricultural Credit and Promote Economic Growth? by Carolina Trivelli, Michael Carter, Francisco Galarza, Alvaro Tarazona, and Johanna Yancari. May 2006. 4 pages.
  [Adobe Acrobat PDF 52K]