Journal Article

Potential Demand for Drought Insurance in Burkina Faso and Its Determinants

Takeshi Sakurai and Thomas Reardon

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 79, issue 4, pages 1193-1207
Published in print November 1997 | ISSN: 0002-9092
Published online November 1997 | e-ISSN: 1467-8276 | DOI: https://dx.doi.org/10.2307/1244277
Potential Demand for Drought Insurance in Burkina Faso and Its Determinants

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The objectives of this paper are twofold: (a) to estimate demand for formal drought insurance using farm household data in Burkina Faso and (b) to find what determines insurance demand. The following findings are salient. First, effective demand is found in all zones, which implies inadequacies in households' current self-insurance strategies. Second, there is much heterogeneity in the strategies to self-insure even within zones. Third, the expectation of public food aid decreases demand for drought insurance, which suggests that food aid is causing moral hazard. Fourth, households with large livestock holdings can reduce the size of herd by substituting drought insurance for livestock holdings.

Keywords: crop diversification; drought; food aid; insurance; livestock; risk management; Sahel; O130; Q140; Q150

Journal Article.  0 words. 

Subjects: Agricultural Economics ; Economic Development

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