This pre-feasibility study was targeted at reviewing the core conditions for developing a weather insurance market and making recommendations about next steps. Key preconditions include assessment of the: 1. Legal and regulatory environment, 2. Acceptance of the concept by users, 3. Quality of weather infrastructure, 4. Correlation of weather events across space, and 5. Potential for developing a weather index that matches crop yields. The expansion of lending to farmers could improve their use of productivity increasing technologies such as improved seeds and fertilizers. The development process can gain significantly if the risk-averse behavior of famers and lenders can be changed so that these technologies are more rapidly adopted. It follows that there should be a role for weather insurance to encourage greater use of capital and technology that can lead to economic growth and provide a safety net for the poor.
