In Simple Words
Imagine buying a flood insurance policy for a seaside home when the main threat destroying local houses is severe wildfire. The policy provides zero payouts when a wildfire hits because the insurance gauge only monitors ocean water levels.
Villages considered for the pilot
- Mainly drought risk
- 84 passed the hazard check
- Mainly frost or flood risk
- No suitable index available
Observed village selection, not a treatment effect. Drought villages faced a further rainfall-record check before inclusion.
See source →Research question
Index insurance products designed around a single peril like rainfall deficit fail when the dominant localized crop hazards faced by smallholders are un-indexed perils like frost or flooding.
Participants
120 Kebeles initially selected across 4 zones (North Shewa, West Gojam, South Wello, North Wello) in Amhara, Ethiopia.
Study Design
Agro-climatic hazard auditing and site selection mapping during pilot program implementation.
Results
36 out of 120 Kebeles (30%) were excluded from the study because rainfall deficit was not the primary hazard, as frost and flooding predominated and lacked suitable index data.
Takeaway
Conduct pre-implementation agro-climatic hazard assessments across target communities to verify that the insured weather metric matches the dominant local driver of crop loss.