Suchergebnisse

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.

Over the past dozen years, policymakers have largely abandoned long-standing popular approaches for addressing risk in agriculture without fully resolving the question of how best to manage the negative consequences of volatile agricultural markets. The article reviews the transition from past policies and describes current approaches that distinguish between the trade-related fiscal consequences of commodity market volatility and the consequences of price and production risks for vulnerable rural households and communities. Current policies rely more heavily on markets, even though markets for risk are incomplete in numerous ways. The benefits and limitations of market-based instruments are examined in the context of risk management strategies, and innovative approaches to extend the reach of risk markets are discussed.