Back to Library

Weather Insurance, Price Information, and Hedging: Helping the Poor Manage Risk

Published by:
Document
Download
Publication date
08/12/2010
Number of Pages
4
Language:
English
Type of Publication:
Working Papers & Briefs
Focus Region:
Asia and the Pacific
Focus Topic:
Climate / Weather / Environment
Type of Risk:
Market-related
Weather & Climate related
Type of Risk Managment Option:
Risk transfer
Commodity:
Crops
Author
Shawn Cole, Raghabendra Chattopadhyay, Stefan Hunt, Jeremy Tobacman, Petia Topalova
Organization
BASIS - University of Wisconsin-Madison

This project proposes to develop and evaluate two complementary interventions, which together will allow households to manage agricultural risk. The first is weather insurance, a financial derivative that pays farmers when rainfall is low. The second links farmers to spot and futures markets, promoting forward-looking planting decisions, and eventually the hedging of risk directly through commodities exchanges. Both interventions will be accessible to, and benefit, women. These innovative interventions are market-based, financially sustainable, and easily scalable, with the potential to transform the lives of poor agricultural households by addressing two of the most important obstacles these households face to accumulating assets and increasing productivity: output risk and price risk.