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<p>The southwestern part of Bangladesh is highly vulnerable to frequent and severe meteorological events, which are exacerbated by rapid climate change. This study addresses the imperative for effective risk reduction in agriculture, given the escalating frequency and intensity of disasters in this region. As conventional markets for crop insurance are lacking, the research employs the Contingent Valuation Method (CVM) to estimate farmers’ Willingness to Pay (WTP) for weather-risk-induced crop insurance programs in three environmentally hazard-prone and geographically vulnerable districts: Khulna, Satkhira, and Bagerhat. A multistage sampling technique was used to select 360 farm households, predominantly involved in paddy production across six villages, comprising farmers of varying scales, though mostly smallholders. The study proposes a hypothetical crop insurance scheme, presenting two benefit packages (ISP1 and ISP2) alongside a status quo option to mitigate yield loss and weather-related risks. Despite ISP2 offering more comprehensive benefits, farmers overwhelmingly prefer ISP1 for its balance of effectiveness and affordability. Approximately 78% of farmers express willingness to participate in the crop insurance intervention, with a mean WTP of BDT 8.06 per decimal/month. Premium rates suggested by farmers range from BDT 4 to BDT 13 per decimal/month. The socially and economically optimal premium rate is determined to be BDT 7 per decimal/month, maximizing revenue and participation while addressing the issue of free ridership. The Double-Bounded Dichotomous Choice (DBDC) model was used to estimate WTP for the crop insurance scheme. Results indicate significant determinants, including education, farming experience, off-farm income, largest plot size, profit from the largest plot, access to credit, access to mobile banking, access to agricultural extension services, and recent experiences with adverse weather events. These findings provide valuable insights for the design and implementation of effective weather-risk-induced crop insurance programs in the vulnerable southwestern region of Bangladesh.</p>

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Economics of Farmers’ Willingness to Participate in Weather-Risk-Induced Crop Insurance in the Southwest Region of Bangladesh

  • 期刊论文

  • 发表日期：

    2025年12月11日

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  • Sk. Faijan Bin Halim,
  • Tasnim Murad Mamun,
  • Jannatul Naim

摘要

The southwestern part of Bangladesh is highly vulnerable to frequent and severe meteorological events, which are exacerbated by rapid climate change. This study addresses the imperative for effective risk reduction in agriculture, given the escalating frequency and intensity of disasters in this region. As conventional markets for crop insurance are lacking, the research employs the Contingent Valuation Method (CVM) to estimate farmers’ Willingness to Pay (WTP) for weather-risk-induced crop insurance programs in three environmentally hazard-prone and geographically vulnerable districts: Khulna, Satkhira, and Bagerhat. A multistage sampling technique was used to select 360 farm households, predominantly involved in paddy production across six villages, comprising farmers of varying scales, though mostly smallholders. The study proposes a hypothetical crop insurance scheme, presenting two benefit packages (ISP1 and ISP2) alongside a status quo option to mitigate yield loss and weather-related risks. Despite ISP2 offering more comprehensive benefits, farmers overwhelmingly prefer ISP1 for its balance of effectiveness and affordability. Approximately 78% of farmers express willingness to participate in the crop insurance intervention, with a mean WTP of BDT 8.06 per decimal/month. Premium rates suggested by farmers range from BDT 4 to BDT 13 per decimal/month. The socially and economically optimal premium rate is determined to be BDT 7 per decimal/month, maximizing revenue and participation while addressing the issue of free ridership. The Double-Bounded Dichotomous Choice (DBDC) model was used to estimate WTP for the crop insurance scheme. Results indicate significant determinants, including education, farming experience, off-farm income, largest plot size, profit from the largest plot, access to credit, access to mobile banking, access to agricultural extension services, and recent experiences with adverse weather events. These findings provide valuable insights for the design and implementation of effective weather-risk-induced crop insurance programs in the vulnerable southwestern region of Bangladesh.