This presentation details some basic information about index insurance, followed by a review of the Mexico case-study example. Drawing the following conclusions:
- WII rapidly increasing in the last decade, but debate whether WII is effective
- This is first paper to empirically study large scale WII on farmers behavior
- Consistent with theory:
- Yields increases (7.6%)
- Income increases (8%) ? positive spillover effects
- Mechanism of multipliers
- Relaxed credit constraint
- Maize area sowed decreases and substituted by likely more profitable crops
- From individual farmers perspective WII passes CBA
- From society perspective, our analysis hints that government likely overpays