Factors affecting farmers' willingness to adopt crop insurance to manage disaster risk: evidence from Bangladesh

• Published in: The international food and agribusiness management review 2021-04, Vol.24 (3), p.463-479
• Main Authors: Islam, Md Din II, Rahman, Airin, Sarker, M. Sazzadur Rahman, Luo, Jianchao, Liang, Hu
• Format: Article
• Language: English
• Subjects: Agribusiness; agriculture; climate change; crop insurance; flood risk; Risk and Uncertainty; willingness to pay
• ISSN: 1559-2448; 1559-2448
• DOI: 10.22004/ag.econ.316289

Climate change and climate-related disasters have had a major impact on agriculture and agricultural livelihoods in Bangladesh, threatening the food security of the entire nation. Non-structural measures such as crop insurance have been recommended as risk management tools for farmers but have not been implemented because of a lack of supporting policies, expertise, and lack of information about farmers’ willingness to adopt such strategies. This study aims to fill that research gap by exploring the factors influencing agricultural producers to purchase crop insurance. Primary data were collected from three districts (Mymensingh, Barisal, and Comilla) that are prone to flooding. A multinomial logit model was adopted to investigate the relationships among dependent and explanatory variables. The results indicate that age, loan size, distance from the major river, farming experience, farming type, and risk attitude affect farmers’ willingness to pay for crop insurance. Government subsidies and increased awareness of the benefits of crop insurance could improve the outlook for the agricultural sector and help medium and subsistence farmers maintain their livelihoods. The results also provide valuable guidance for local, national, and international stakeholders.