Risk aversion, rural financial markets and the demand for crop insurance

Abstract

24 ref.

The paper starts with the observation that the market for yield insurance of agricultural commodities has failed universally, even in the most developed countries. Section I shows that failure of the markets does not arise from lack of demand for consumption and/or. Section II shows that the main theme of the paper will be the rigorous explotation of the causes of the serious difficulties of both the credit market in rural areas as well as the yield insurance market; besides, it is discussed a number of empirical and preliminary issues which impinge heavily on the benefits of crop insurance and which could arise potentially even in the fairy tale world mentioned in this paper. Third, it is discussed alternative means for stabilizing agricultural incomes such as crop diversification, agronomic practices, and price stabilization. The document concludes in the final section with some conclusions.