Robert Lensink (DEC): Uptake and impact of interlinked Index-based Insurance with credit and agricultural Input

Experimental Evidence from Ethiopia

This paper examines the results of randomized experiments in Ethiopia that assess the relevance of bundling index-based insurance (IBI) with credit and inputs. We compare four IBI options and their impact on adoption of modern technologies, consumption and productivity: (1) standard IBI; (2) newly-developed IBI, i.e. promoted via farmer groups and featuring a delayed premium option; (3) new IBI bundled with credit; and (4) new IBI bundled with credit and inputs. We find that only when farmers adopt a package comprised of insurance, credit and inputs, do they significantly increase their investment in modern agricultural technologies and, consequently, productivity grows.