The costs and benefits of yield and minimum income insurance to rural agricultural households in Ethiopia

Date

2017-05

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Abstract

Food insecurity, poverty, and risk affect people’s well-being around the world on a daily basis. This research looks specifically at agricultural producing households in rural Northwestern Ethiopia and how yield insurance and minimum income insurance would impact household welfare. A representative household budget is built and analyzed through simulation using the PQH procedures. The impacts of yield insurance and minimum income insurance is examined to determine the impact of alternative risk mitigation options on household welfare. Additionally, viability of the insurance programs for the Ethiopian government is analyzed, through benefit-cost analysis. This has the potential to assist governments in developing countries in providing public sector insurance programs for subsistence agricultural households if the programs prove to be viable.

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Keywords

Food insecurity, Poverty, Risk, Crop insurance, Risk management, Development economics

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