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Multi‐site bundling of drought tolerant maize varieties and index insurance

Author: Awondo, S.N.
Author: Kostandini, G.
Author: Setimela, P.S.
Author: Erenstein, O.
Year: 2020
ISSN: 1477-9552
URI: https://hdl.handle.net/10883/20255
Abstract: Drought Tolerant Maize Varieties (DTMV) and Rainfall Index Insurance (RII) are potential complements, though with limited empirical basis. We employ a multivariate spatial framework to investigate the potential for bundling DTMV with a simulated multi‐site and multi‐environment RII, designed to insure against mild, moderate and severe drought risk. We use yield data from on‐farm trials conducted by the International Maize and Wheat Improvement Center (CIMMYT) and partners over 49 locations in Eastern and Southern Africa spanning 8 countries and 5 mega‐environments (dry lowland, dry mid altitude, wet lower mid altitude, low wetland and wet upper mid altitude) in which 19 different improved maize varieties including DTMV were tested at each location. Spatially correlated daily rainfall data are generated from a first‐order two‐state Markov chain process and used to calibrate the index and predict yields with a hierarchical Bayes multivariate spatial model. Results show high variation in the performance and benefits of different bundles which depend on the maize variety, the risk layer insured, and the type of environment, with high chances of selecting a sub‐optimal and unattractive contract. We find that complementing RII with a specific DTMV produces contracts with lower premiums and higher guaranteed returns especially in dry lowland increasing the chances of scaling up RII within this environment.
Format: PDF
Language: English
Publisher: Wiley
Copyright: CIMMYT manages Intellectual Assets as International Public Goods. The user is free to download, print, store and share this work. In case you want to translate or create any other derivative work and share or distribute such translation/derivative work, please contact CIMMYT-Knowledge-Center@cgiar.org indicating the work you want to use and the kind of use you intend; CIMMYT will contact you with the suitable license for that purpose.
Type: Article
Place of Publication: USA
Pages: 239-259
Issue: 1
Volume: 71
DOI: 10.1111/1477-9552.12344
Keywords: Drought Tolerant Maize Varieties
Keywords: Mega-Environment
Keywords: Multi-Site Index Insurance
Keywords: Multivariate Hierarchical Bayes
Country of Focus: AFRICA
Agrovoc: MAIZE
Agrovoc: DROUGHT TOLERANCE
Agrovoc: VARIETIES
Notes: The dataset related with this article is only referential
Related Datasets: https://onlinelibrary.wiley.com/action/downloadSupplement?doi=10.1111%2F1477-9552.12344&file=jage12344-sup-0001-Appendix_e.docx
Journal: Journal of Agricultural Economics


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    Including topics such as farming systems, markets, impact & targeting, innovations, and GIS

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