When and How Should Agricultural Insurance Be Subsidized? : Issues and Good Practices
Agricultural insurance, defined here to include crop and livestock insurance, is an instrument of choice in many countries for helping farmers and rural communities cope with risk. This paper explores the reasons why governments and donors subsidiz...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
International Labour Organization and the International Finance Corporation
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/330501498850168402/When-and-how-should-agricultural-insurance-be-subsidized-issues-and-good-practices http://hdl.handle.net/10986/31438 |
| Summary: | Agricultural insurance, defined here to
include crop and livestock insurance, is an instrument of
choice in many countries for helping farmers and rural
communities cope with risk. This paper explores the reasons
why governments and donors subsidize agricultural insurance,
and asks: (a) is this a worthwhile way to spend public
money, and (b) if insurance must be subsidized are there
smarter ways of doing it that can achieve the same
objectives, but at lower cost, and which avoid some of the
economic and institutional pitfalls that have plagued
subsidized agricultural insurance in the past. The paper is
structured as follows: section one gives introduction.
Section two reviews existing types and levels of subsidies
for agricultural insurance, both globally and for the
developing world. Section three reviews the various
arguments that have been offered for subsidizing
agricultural insurance, while section four discusses some of
the key challenges that have arisen when insurance subsidies
are poorly designed. Section five seeks to balance the
benefits and costs of subsidized agricultural insurance, and
asks whether this has proven to be a worthwhile way of
spending public funds. Section six presents a set of guiding
principles and best practices to be used in their design and
implementation. Finally, section seven concludes. |
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