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ORIGINAL RESEARCH article

Front. Clim.
Sec. Climate Risk Management
Volume 6 - 2024 | doi: 10.3389/fclim.2024.1476202
This article is part of the Research Topic Climate-Smart Livestock Production: Strategies for Enhanced Sustainability and Resilience View all 3 articles

Index-Based Livestock Insurance Schemes to Manage Climate Risks in Ethiopia: Determinants of Farmer's Willingness to Pay and Lessons Learnt from Dasenech District, South Omo

Provisionally accepted
Tagesse Melketo Tagesse Melketo 1*Degefa Tolossa Degefa Tolossa 2Meskerem Abi Meskerem Abi 2Sisay Bedeke Sisay Bedeke 1Tenaw Fentaw Tenaw Fentaw 3
  • 1 Wolaita Sodo University, Sodo, Ethiopia
  • 2 Addis Ababa University, Addis Ababa, Addis Ababa, Ethiopia
  • 3 CORDAID Ethiopia, Addis Ababa, Addis Ababa, Ethiopia

The final, formatted version of the article will be published soon.

    Livestock insurance, an important risk management tool, is gaining popularity in Ethiopia. Proper investigation is needed to expand its adaptability throughout the country. This study was designed to explore the willingness and payment capacity of farmers in Southern Ethiopia to pay for indexbased livestock insurance as an alternative solution to climate risk mitigation. A mixed research method was employed to gather data from primary and secondary sources. Cross-sectional data were obtained from 157 cattle farmers, drawn randomly from the study area. The study also used key informant interviews and focus group discussions to collect qualitative data. Descriptive statistics, inferential tests, and double-hurdle model were used to analyze the quantitative data. Word descriptions and thematic analysis were employed for qualitative data analysis. The results of the study evidenced that a significant proportion of farmers were willing to pay for IBLI services. The findings also suggested that the demand for index-based livestock insurance seemed to be influenced by a number of factors. Those households who are male headed, who are better educated, who are better experienced in farming system, and those who have access to credit and training are more likely to pay for the insurance. Farmers' perception of weather-related risks and awareness about insurance also influenced farmers' willingness to pay positively. Furthermore, farmers with larger assets, such as land and livestock, have more confidence in paying capacity for insurance. Farmers with mass media access were more likely to pay for IBLI. However, households with larger number of household members and those who perceived the cost of the insurance premium is unaffordable are less likely to purchase the IBLI. These significant factors impacting households' willingness to pay for the insurance services must be considered in adaptation pathways. The Dasenech district case study suggests that IBLI can effectively mitigate climate risks and be applied to other regions with similar socioeconomic characteristics and production systems.

    Keywords: Index-based livestock insurance, climate risk mitigation, Willingness to pay, Normalized differential vegetation index, double-hurdel model

    Received: 05 Aug 2024; Accepted: 19 Dec 2024.

    Copyright: © 2024 Melketo, Tolossa, Abi, Bedeke and Fentaw. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

    * Correspondence: Tagesse Melketo, Wolaita Sodo University, Sodo, Ethiopia

    Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.