Researchers at Wageningen University Target Livestock Insurance (The Welfare Effects of Index-based Livestock Insurance: Livestock Herding On Communal Lands)

2021 APR 12 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- A new study on Livestock Insurance is now available. According to news reporting from Wageningen, Netherlands, by NewsRx journalists, research stated, “Agricultural (index) insurance for smallholders in developing countries has gained traction in academic and policy circles. The expectation is that the uptake of insurance will protect smallholders from production shocks and incentivize them to modernize production.”

The news correspondents obtained a quote from the research from Wageningen University, “We develop a simple theoretical model to demonstrate that the welfare effects of insurance are fundamentally ambiguous-even in the absence of transaction costs or basis risk. The second-best nature of the institutional context within which smallholders operate implies that the uptake of insurance may accentuate pre-existing inefficiencies. This idea is worked out in detail for the case of livestock herding on common grazing lands.”

According to the news reporters, the research concluded: “Our theoretical model predicts that insurance invites overstocking of communal lands, and lowers the profitability of herding when common pastures are degraded.”

This research has been peer-reviewed.

For more information on this research see: The Welfare Effects of Index-based Livestock Insurance: Livestock Herding On Communal Lands. Environmental and Resource Economics, 2021;78(4):587-613. Environmental and Resource Economics can be contacted at: Springer, Van Godewijckstraat 30, 3311 Gz Dordrecht, Netherlands. (Springer - www.springer.com; Environmental and Resource Economics - http://www.springerlink.com/content/0924-6460/)

Our news journalists report that additional information may be obtained by contacting Erwin Bulte, Wageningen University, Dev Econ Grp, Nl-8700 Ew Wageningen, Netherlands.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1007/s10640-021-00545-1. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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