Combining improved seed varieties and index insurance to address drought losses

Read “Bundling Genetic and Financial Technologies for More Resilient and Productive Small-scale Agriculture” here.

Adverse weather conditions can have long-lasting effects on farmers. The impact of drought, for example, can linger for up to two years. Solutions to this challenge often only partially address the issue and their uptake is slow. In this VoxDevTalk, Paswel Marenya discusses his work with co-authors Stephen Boucher, Michael Carter, Jon Flatnes, Travis Lybbert, Jonathan Malacarne, and Laura Paul in which they undertake a randomised control trial to test the impact of combining two risk management technologies in Mozambique and Tanzania – drought-resistant seeds and index insurance – to mitigate the adverse impact of drought. The improved seeds provide good protection for moderate mid-season droughts, while the index insurance provides relief and transfers risk when extreme drought sets in.  The two technologies expand each other's benefits as the improved seeds reduce the cost of insurance, while the insurance reduces the risk of adopting the seeds themselves. As such, farmers with both drought tolerant seeds and index insurance have greater resilience to drought in the short and long term. The research stresses the importance of entrepreneurial experimentation to illustrate the benefits of these solutions to farmers and inform the scaling-up of the solution-bundling approach.