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Journal ArticleDOI

A double-hurdle model estimation of cocoa farmers’ willingness to pay for crop insurance in Ghana

24 Jun 2016-SpringerPlus (SpringerOpen)-Vol. 5, Iss: 1, pp 873-873
TL;DR: The study recommends that cocoa farmers should be well educated on crop insurance and should be involved in planning the crop insurance scheme in order to conclude on the premium to be paid by them.
Abstract: Agriculture is an important sector in Ghana’s economy, however, with high risk due to natural factors like climate change, pests and diseases and bush fires among others. Farmers in the Brong-Ahafo region of Ghana which is known as one of the major cocoa producing regions, face these risks which sometimes results in crop failure. The need for farmers to therefore insure their farms against crop loss is crucial. Insurance has been a measure to guard against risk. The aim of this study was to assess cocoa farmers’ willingness to access crop insurance, the factors affecting willingness to pay (WTP) for crop insurance scheme and insurance companies’ willingness to provide crop insurance to cocoa farmers. Multi-stage sampling technique was used to sample 240 farmers from four communities in the Dormaa West District in Brong-Ahafo Region. The double-hurdle model shows that age, marital status and education significantly and positively influenced cocoa farmer’s willingness to insure their farms whiles household size and cropped area negatively influenced farmers’ willingness to insure their farms. Similarly, age, household size and cropped area significantly and positively influenced the premium cocoa farmers were willing to pay whiles marital status and cocoa income negatively influenced the premium farmers were willing to pay. The contingent valuation method shows that the maximum, minimum and average amounts cocoa farmers are willing to pay for crop insurance per production cost per acre was GH¢128.40, GH¢32.10 and GH¢49.32 respectively. Insurance companies do not have crop insurance policy but willing to provide crop insurance policy to cocoa farmers on a condition that farmers adopt modern cultivation practices to reduce the level of risk. The study recommends that cocoa farmers should be well educated on crop insurance and should be involved in planning the crop insurance scheme in order to conclude on the premium to be paid by them.

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Citations
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Journal ArticleDOI
TL;DR: In this paper, the authors examined the factors influencing the adoption of crop insurance as a risk management strategy by Pakistani farmers and found that age, farming experience, education level, risk perception of floods, land ownership status, land holding size, access to credit, access of information sources, agricultural extension services, and distance from river were significantly associated with farm households' decisions to purchase crop insurance.

43 citations

Journal ArticleDOI
TL;DR: In this paper, the authors analyzed cocoa farmers' perception on climate change and adaptation strategies in the Brong-Ahafo Region of Ghana and found that these perceptions would help identify knowledge knowledge.
Abstract: This study analyses cocoa farmers’ perception on climate change and adaptation strategies in the Brong-Ahafo Region of Ghana. Better understanding of these perceptions would help identify knowledge...

39 citations

Journal ArticleDOI
TL;DR: In this paper, the authors analyzed farmer's perceptions on climate change, their willingness to insure their farms and their recovery from or resilience to climate shocks, and concluded that most of the farmers recover faster from climate shocks as nearly all the farmers indicated an ability to recover from climate shock with shorter time periods.
Abstract: This study analysed farmer’s perceptions on climate change, their willingness-to-insure their farms and their recovery from or resilience to climate shocks. This involved 209 farmers that were selected through a multistage sampling procedure in the Northern region of Ghana. The data was analysed using double hurdle and ordered probit regressions. From the result, the study established that most of the farmers were willing-to-insure their farms and were willing-to-pay a positive price for farm insurance. The decision to insure farm was significantly influenced by education, farmer group membership and floods. On the other hand, farmer group membership, remitters, windstorm, climate perception and location in a rich class district, extension access, commercial production, floods, drought and off-farm diversification significantly influenced the premium farmers were willing to pay. It is concluded that most of the farmers recover faster from climate shocks as nearly all the farmers indicated an ability to recover from climate shocks with shorter time periods. Generally, the factors that had significant effect on the recovery period of the farmers were age, education, number of children, access to extension service, contract farming, farmer group membership, farm size, sex, number of household adults, access to credit and farm insurance. Therefore, farm insurance is an important strategy of making farming households recover faster from climate shocks. As such, there is the need to introduce farm insurance policies to crop farmers in the region at an agreed price between farmers and insurance providers.

22 citations

Journal ArticleDOI
TL;DR: In this article, a review synthesises broad recent literature on why insurance take-up has remained low and highlights six key themes, including product quality, product design, affordability, information and education, behavioural and sociocultural factors, and the role of government in enabling markets.
Abstract: Weather shocks affect smallholder farmers and pastoralists in Sub-Saharan Africa unequally. Agricultural insurance has emerged as a safety net option to protect farmers’ welfare. However, in comparison to other regions, fewer African farmers and pastoralists have adopted agricultural insurance. This review synthesises broad recent literature on why insurance take-up has remained low and highlights six key themes, including: (1) product quality, (2) product design, (3) affordability, (4) information and education, (5) behavioural and sociocultural factors, and (6) the role of government in enabling markets. We shed light on how insurance uptake can be encouraged.

18 citations

Journal ArticleDOI
TL;DR: In this paper, the Heckman's treatment effect model and stochastic frontier analysis (SFA) were applied to study cocoa farmers' production efficiency, which indicated that the financial support received from RCBs has a significant and positive effect on farmers' technical efficiency.

14 citations

References
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Journal ArticleDOI
TL;DR: This article developed several models for limited dependent variables, which are extensions of the multiple probit analysis model and differ from that model by allowing the determination of the size of the variable when it is not zero to depend on different parameters or variables from those determining the probability of its being zero.
Abstract: THIS PAPER DEVELOPS some models for limited dependent variables.2 The distinguishing feature of these variables is that the range of values which they may assume has a lower bound and that this lowest value occurs in a fair number of observations. This feature should be taken into account in the statistical analysis of observations on such variables. In particular, it renders invalid use of the usual regression model. The second section of this paper develops several models for such variables. Like Tobin's [10] model, they are extensions of the multiple probit analysis model.3 They differ from that model by allowing the determination of the size of the variable when it is not zero to depend on different parameters or variables from those determining the probability of its being zero. Estimation and discrimination in the models are considered in Section 3. The models, like their prototypes, seem particularly intractable to exact analysis and large sample approximations have to be used. The adequacy of inferences based on these procedures is explored in Section 4 through a small sampling experiment. Limited dependent variables arise naturally in the study of consumer purchases, particularly purchases of durable goods. When a durable good is to be purchased, the amount spent may vary in fine gradations, but for many durables it is probably the case that most consumers in a particular period make no purchase at all. In Section 5 we apply the models to the demand for durable goods to provide an application of the techniques.

2,808 citations


"A double-hurdle model estimation of..." refers background or methods in this paper

  • ...For such a case, it is possible respondents (farmers) cannot give a number representing their WTP but may recognize the fact that they have a positive WTP. Cragg (1971) suggested a double-hurdle model in which adoption behavior consists of two decisions: an adoption decision, which is a binary choice, modelled using a Logit; and a WTP amount decision, which is a truncated regression model....

    [...]

  • ...Various studies have used either the double-hurdle model or the Heckman’s sample selection model in determining the willingness to pay for insurance (Cragg 1971; Norris and Batie 1987; Gabre-Madhin et al. 2003; Sindi 2008; Wodjao 2008; Yu and Abler 2010, Musah 2013)....

    [...]

  • ...Various studies have used either the double-hurdle model or the Heckman’s sample selection model in determining the willingness to pay for insurance (Cragg 1971; Norris and Batie 1987; Gabre-Madhin et al. 2003; Sindi 2008; Wodjao 2008; Yu and Abler 2010, Musah 2013). In this study, the double-hurdle model was adopted based on its advantage over the Heckman’s sample selection model. The Heckman sample selection model assumes that no zero response will be present in the second hurdle of the analysis once the first hurdle is passed whiles the double-hurdle on the other hand recognizes the possibility of zero observations in the second stage (Wodjao 2008). The possibility of zero response is as a result of the fact that the cocoa farmer may refuse to answer due to a lack of knowledge or how complex the questions are perceived to be. In addition, some cocoa farmers may only have partial information concerning their willingness to pay (Yu and Abler 2010). For such a case, it is possible respondents (farmers) cannot give a number representing their WTP but may recognize the fact that they have a positive WTP. Cragg (1971) suggested a double-hurdle model in which adoption behavior consists of two decisions: an adoption decision, which is a binary choice, modelled using a Logit; and a WTP amount decision, which is a truncated regression model....

    [...]

  • ...Various studies have used either the double-hurdle model or the Heckman’s sample selection model in determining the willingness to pay for insurance (Cragg 1971; Norris and Batie 1987; Gabre-Madhin et al....

    [...]

  • ...…a case, it is possible respondents (farmers) cannot give a number representing their WTP but may recognize the fact that they have a positive WTP. Cragg (1971) suggested a double-hurdle model in which adoption behavior consists of two decisions: an adoption decision, which is a binary choice,…...

    [...]

Journal ArticleDOI
TL;DR: The authors found that gender, age, height, and parental background have an economically significant impact on willingness to take risks, and the question about risk taking in general generates the best all-round predictor of risky behavior.
Abstract: This paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects’ homes. Using a question asking people about their willingness to take risks \"in general\", we find that gender, age, height, and parental background have an economically significant impact on willingness to take risks. The experiment confirms the behavioral validity of this measure, using paid lottery choices. Turning to other questions about risk attitudes in specific contexts, we find similar results on the determinants of risk attitudes, and also shed light on the deeper question of stability of risk attitudes across contexts. We conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks, occupational choice, and smoking. The question about risk taking in general generates the best all-round predictor of risky behavior.

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Posted Content
TL;DR: The authors found that gender, age, height, and parental background have an economically significant impact on willingness to take risks, and the question about risk taking in general generates the best all-around predictor of risky behavior.
Abstract: This paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects’ homes. Using a question asking people about their willingness to take risks “in general”, we find that gender, age, height, and parental background have an economically significant impacton willingness to take risks. The experiment confirms the behavioral validity of this measure, using paid lottery choices. Turning to other question about risk attitudes in specific contexts, we find similar results on the determinants of risk attitudes, and also shed light on the deeper question of stability of risk attitudes across contexts. We conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks, occupational choice, and smoking. The question about risk taking in general generates the best all-around predictor of risky behavior

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BookDOI
01 Jan 2014
TL;DR: In this article, the authors present a regional context of Africa, Asia, and North America, and Central South America for small islands in the open oceans, including small islands and open oceans.
Abstract: 21. Regional context 22. Africa 23. Europe 24. Asia 25. Australasia 26. North America 27. Central South America 28. Polar regions 29. Small islands 30. Open oceans Annexes.

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