Journal
AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS
Volume 101, Issue 3, Pages 672-691Publisher
OXFORD UNIV PRESS INC
DOI: 10.1093/ajae/aay042
Keywords
Drought; livestock; pastoralism; social networks
Categories
Funding
- Cornell University
- International Livestock Research Institute (ILRI)
- JSPS [26301021]
- U.S. Agency for International Development (USAID) through Broadening Access and Strengthening Input Market Systems Collaborative Research Support Program (BASIS AM) Innovation Lab [LAG-A-00-96-90016-00]
- Department of Foreign Affairs and Trade through the Australia Development Research Awards Scheme
- CGIAR Research Program on Climate Change, Agriculture and Food Security
- CGIAR Research Program on Dryland Systems
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We study how the introduction of a formal index insurance product affects informal risk-sharing among pastoralists in southern Ethiopia. Using detailed social networks data, randomized incentives to purchase the insurance product, and hypothetical informal transfer data that mirror the existing customary arrangements, we find respondents' own formal insurance uptake has no significant effect on their willingness to share risk through customary institutions. We also find weak evidence that a randomly matched peer's insurance uptake positively influences respondents' willingness to make informal transfers to that match. Overall, our results imply that in this context index insurance does not crowd out informal risk-sharing mediated by social networks.
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