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This article justifies the use of a new methodical approach to index insurance of agricultural producers against weather risks, in particular, the use of the thermal-hydraulic combined index (Ith) as the weather index of the effect of several triggers (temperature and precipitation) on yields, taking into account the uniformity of weather and climatic conditions over time. General scientific methods of scientific knowledge and research of economic phenomena are used for the scientific solution. The theoretical and methodological bases of the research are the works of scientists and practitioners involved in researching the market of agricultural insurance services in general and the issues of developing an effective system of agrarian insurance, in particular. The main method of research is the method of mathematical statistics, namely, a multivariate analysis of variance. This article presents research on the application of index insurance schemes while using weather index products. The advantages and disadvantages of these products are considered and the mechanism of the index insurance is described in general. The article considers the possibility of applying a rainfall index with a temperature threshold, and the thermal-hydraulic index (Ith) that takes into account and simultaneously combines several parameters is calculated. Considering the research findings, the authors suggest the adoption of the compound thermalhydraulic index (Ith) and present a detailed description of the functioning of this mechanism. Approbation of the methodological tools was carried out on the example of the Uman District of the Cherkasy Region of central Ukraine. [ABSTRACT FROM AUTHOR]

Index insurance appeared recently in developing countries with the expectation to improve agricultural output and living standards in general. We investigate how experiencing extreme weather events affects farmers' decision to purchase index insurance in India. Extreme weather events are identified from historical precipitation data and matched with a randomised household panel. Excessive rainfall in previous years during the harvest increases the insurance demand, while lack of rainfall in the planting and growing periods has no effect. The latter can be explained by access to irrigation, underscoring the importance of the local context when developing insurance products to accommodate environmental risks. [ABSTRACT FROM AUTHOR]

Climate change is increasing the risks of weather-related disasters in many regions around the world. This has an adverse socio-economic impact on households, farmers and small businesses. Some strategies for effectively managing climate related disasters include index based insurance products, which are increasingly offered as alternatives to traditional insurance, particularly in low-income countries. However, the uptake of index insurance remains low, which can be partially attributed to the inherent problem of basis risk. This review assesses the problem of basis risk that occurs when insurance payouts depend on an index that is imperfectly related with actual losses experienced by the insurance policyholder. Special attention is paid to the design of the index, quality and sampling data, the estimation of basis risk and its influence on insurance demand, and index-insurance supply. The paper concludes with several policy recommendations including the need for a systematic approach to quantify the magnitude of basis risk, to inform index design with participatory approaches, to offer index insurance through existing risk sharing networks. Moreover, we recommend to improve policyholders access to information about their risk and measures they can take to limit risk, create an enabling environment for a well-functioning insurance market, and lastly to have an integrated approach that incorporates insurance with other mechanisms that reduce basis risk. [ABSTRACT FROM AUTHOR]

This paper explores the possibility of utilizing rainfall data and Normalized the Difference Vegetation Index (NDVI) data for developing an insurance product that protects farmers from weather related yield losses of wheat production in Pakistan's barani areas. This study finds that while rainfall data serves as an effective index, NDVI data (only) partially captures the yield variability in wheat production. [ABSTRACT FROM AUTHOR]

Copyright of Economics of Agriculture / Ekonomika Poljoprivrede is the property of Institute of Agricultural Economics (IAE) / Belgrade and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article investigates the impact that indemnity payments from index insurance have on the asset recovery of households following a catastrophic weather disaster. Our focus is on the Index-Based Livestock Insurance (IBLI) in Mongolia. We analyze the effect of IBLI indemnity payments after a once-every-50-year winter disaster struck Mongolia over the winter of 2009/2010. The analysis is based on three waves of a household panel survey implemented in western Mongolia two to five years after the shock. We employ the bias-corrected matching estimator to account for selection into purchasing IBLI. Results indicate that pastoralist households purchasing IBLI before the shock recover faster from shock-induced asset losses than comparable uninsured households. We find a significant, positive, and economically large effect of IBLI indemnity payments on herd size one to three years after the shock. Four years after the shock, the effect vanishes. Results are robust to defining post-shock livestock recovery in various ways, as well as the choice of covariates and the use of alternative propensity score estimators. An analysis of shock-coping strategies suggests that IBLI appears to have relieved households from credit constraints. In addition, indemnity payments helped herders avoid selling and slaughtering animals, thus smoothing their productive asset base. Our article is among the first to provide evidence on the beneficial effects of index insurance after a weather shock in a developing economy. [ABSTRACT FROM AUTHOR]

Global insurance markets are vast and diverse, and may offer many opportunities for remote sensing. To date, however, few operational applications of remote sensing for insurance exist. Papers claiming potential application of remote sensing typically stress the technical possibilities, without considering its contribution to customer value for the insured or to the profitability of the insurance industry. Based on a systematic search of available literature, this review investigates the potential and actual support of remote sensing to the insurance industry. The review reveals that research on remote sensing in classical claim-based insurance described in the literature revolve around crop damage and flood and fire risk assessment. Surprisingly, the use of remote sensing in claim-based insurance appears to be instigated by government rather than the insurance industry. In contrast, insurance companies are offering various index insurance products that are based on remote sensing. For example, remotely sensed index insurance for rangelands and livestock are operational, while various applications in crop index insurance are being considered or under development. The paper discusses these differences and concludes that there is particular scope for application of remote sensing by the insurance industry in index insurance because (1) indices can be constructed that correlate well with what is insured; (2) these indices can be delivered at low cost; and (3) it opens up new markets that are not served by claim-based insurance. The paper finally suggests that limited adoption of remote sensing in insurance results from a lack of mutual understanding and calls for greater cooperation between the insurance industry and the remote sensing community.

Abstract: With minimal moral hazard and adverse selection, weather index insurance promises financial resilience to farmers struck by harsh weather conditions through swift compensation at affordable premium. Despite these advantages, the very nature of indexing gives rise to production basis risk as the selected weather indexes do not sufficiently correspond to actual damages. To address this problem, we develop a stochastic yield model, built upon a stochastic soil moisture model driven by marked Poisson rainfall. Our analysis shows that even under similar temperature and rainfall amount yields can differ significantly; this was empirically supported by a 2‐year field experiment in which rain‐fed maize was grown under very similar total rainfall. Here, the year with more intense, less‐frequent rainfall produces a better yield—a rare counter evidence to most climate change projections. Through a stochastic yield model, we demonstrate the crucial roles of rainfall intensity and frequency in determining the yield. Importantly, the model allows us to compute rainfall pattern‐related basis risk inherent in cumulative rain index insurance. The model results and a case study herein clearly show that total rainfall is a poor indicator of yield, imposing unnecessary production basis risk on farmers and false‐positive payouts on insurers. Incorporating rainfall intensity and frequency in the design of rain index insurance can offer farmers better protection, while maintaining the attractive features of the weather index insurance and thus fulfilling its promise of financial resilience. [ABSTRACT FROM AUTHOR]

Copyright of Sub Saharan Review of Economics & Finance / Revue Sub-Saharienne d'Economie et de Finance is the property of Editions Dianoia and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Social protection programmes aim to use public funds to reduce poverty and vulnerability. Cash transfers have proven to be an effective social protection strategy in many contexts but are extremely expensive. Researchers have suggested that integrating multiple interventions could improve the efficiency of protection programmes, but there are few evidence-based recommendations on how to best implement such approaches. This study uses household-level panel data to estimate the marginal impacts of observed cash and index insurance transfers (subsidies) on household income in northern Kenya. Those estimates are used to simulate sample-level poverty indices as the outcome of a standard cash transfer programme and of a similar programme that reallocates a small portion of the budget as an insurance subsidy to the vulnerable. We find that the integrated programme reduces poverty to a greater degree than do cash transfers alone, highlighting the importance of protecting the vulnerable in addition to supporting the poorest. [ABSTRACT FROM AUTHOR]

While crop yields in Sub-Saharan Africa are low compared to most other parts of the world, weather-index insurance is often presented as a promising tool, which could help resource-poor farmers in developing countries to invest and adopt yield-enhancing technologies. Here, we test this hypothesis on two contrasting areas (in terms of rainfall scarcity) of the Senegalese groundnut basin through the use of a bio-economic farm model, coupling the crop growth model CELSIUS with the economic model ANDERS, both specifically designed for this purpose. We introduce a weather-index insurance whose index is currently being used for pilot projects in Senegal and West Africa. Results show that insurance leads to a welfare gain only for those farmers located in the driest area. These farmers respond to insurance mostly by increasing the amount of cow fattening, which leads to higher crop yields thanks to the larger production of manure. We also find that subsidizing insurance is not the best possible use of public funds: for a given level of public funding, reducing credit rates, subsidizing fertilizers, or just transferring cash as a lump-sum generally brings a higher expected utility to farmers and leads to a higher increase in grain production levels. [ABSTRACT FROM AUTHOR]

Agricultural insurance programs are currently being championed by international donors in many developing countries. They are acclaimed as promising instruments for coping with climate risk. However, research on their impacts has mainly focused on economic considerations. Studies on broader social and ecological consequences are sparse and have produced ambiguous and inconclusive results. We address this knowledge deficit by (a) advocating for a holistic view of social-ecological systems and vulnerability when considering insurance impacts; (b) offering a systematic overview highlighting the potential beneficial and adverse effects of ‘climate insurance’ in agriculture, particularly where programs target intensifying agricultural production; and (c) suggesting preliminary principles for avoiding maladaptive outcomes, including specific recommendations for designing appropriate impact studies and insurance programs. Our synopsis brings together scientific knowledge generated in both developing and developed countries, demonstrating that agricultural insurance programs shape land-use decisions and may generate serious economic, social, and ecological consequences. If insurance is to be an appropriate tool for mitigating the impacts of climate change, it needs to be carefully developed with specific local social-ecological contexts and existing risk coping strategies in mind. Otherwise, it is liable to create long-term maladaptive outcomes and undermine the ability of these systems to reduce vulnerability. [ABSTRACT FROM AUTHOR]

Summary This paper evaluates the welfare impacts of an index-based livestock insurance designed to compensate for satellite-based predicted livestock mortality in northern Kenya, where previous work has established the presence of poverty traps. We simulate household wealth dynamics based on rich panel and experimental data. The bifurcated livestock dynamics associated with the poverty trap gives rise to insurance valuation that is highly nonlinear in herd size. Estimated willingness to pay among vulnerable groups who most need insurance is, on average, lower than commercially viable rates. Targeted premium subsidization nonetheless appears to offer more cost-effective poverty reduction than need-based direct transfers. [ABSTRACT FROM AUTHOR]

Index insurance is often promoted as a solution to many of the barriers that are thought to limit the supply of formal insurance coverage to smallholder farmers and livestock owners in developing countries. This manuscript summarizes the state of index insurance, paying special attention to the key challenges facing index insurance if it is to become a more effective tool for development. We then offer recommendations to tackle those challenges by strategically investing in a set of public goods and services geared towards addressing key informational gaps and improving the quality of index insurance products around the world. [ABSTRACT FROM AUTHOR]

Hydropower on the Great Lakes makes up a substantial fraction of regional electricity generation capacity. Hydropower producers on the Niagara River (flowing between lakes Erie and Ontario) operate as run-of-river, and changing lake levels alter interlake flows reducing both generation and revenues. Index-based insurance contracts, wherein contract payouts are linked to lake levels, offer a tool for mitigating this risk. As a potentially useful tool, pricing of financial insurance is typically based on historical behavior of the index. However, uncertainty with respect to the impacts of climate change on lake level behavior and how this might translate to increased (or decreased) risk for those selling or buying the insurance remains unexplored. Portfolios of binary index-insurance contracts are developed for hydropower producers on the Niagara River, and their performance is evaluated under a range of climate scenarios. Climate Informed Decision Analysis is used to inform the sensitivity of these portfolios to potential shifts in long-term, climatological variations in water level behavior. Under historical conditions, hydropower producers can use portfolios costing 0.5% of mean revenues to increase their minimum revenue threshold by approximately 18%. However, a one standard deviation decrease in the 50 year mean water level potentially doubles the frequency with which these portfolios would underperform from the perspective of a potential insurer. Trade-offs between portfolio cost and the frequency of underperformance are investigated over a range of climate futures. [ABSTRACT FROM AUTHOR]

The purpose of this study is to investigate the effect of farmers' risk preferences on their decisions to purchase the agricultural weather index insurance based on the evidence from a household survey and field experiments conducted in Yongqiao District, Suzhou City of Anhui Province in China. Our empirical results show that farmers' risk aversion significantly increases the probability of their decision to buy weather index-based crop insurance. Other factors that significantly influence weather index insurance participation decisions include farmers' subjective beliefs on the probability of crop losses, farming experience, education level, farm size, and their household income. The empirical results of this study can provide helpful insights for policymakers and local insurers to further improve farmers' participation in weather index-based crop insurance. [ABSTRACT FROM AUTHOR]

Better insurance against rainfall risk could improve the security of hundreds of millions of agricultural households around the world. This paper theoretically and experimentally analyses an innovative financial product called a Weather Insurance Savings Account (WISA), which combines savings and rainfall insurance. We index the insurance share of the WISA by γ ϵ [0, 1] and use a standard model of intertemporal insurance demand to study preferences over γ . We then use a laboratory experiment to elicit participants' valuations of pure insurance, pure savings, and intermediate WISA types. Contrary to the standard model, within-subject comparisons show that many participants prefer both pure insurance and pure savings to any interior mixture of the two. Additional experimental and observational evidence distinguishes between several alternative explanations. One possibility that survives our additional tests is diminishing sensitivity to losses, as in prospect theory. [ABSTRACT FROM AUTHOR]

The number of index insurance pilots in developing countries has grown tremendously in recent years, but there has been little progress in our understanding of the quality of those products. Basis risk, or remaining uninsured risk, is a widely recognized but rarely measured feature of index insurance product quality. This article uses eight semi-annual seasons of longitudinal household data to examine the distribution of basis risk associated with an index-based livestock insurance (IBLI) product in northern Kenya. We find that IBLI coverage reduces exposure to covariate risk due to large shocks and mitigates downside risk substantially for many households, even at commercial premium rates. But index insurance is no magic bullet; insured households continue to face considerable basis risk. Examining the components of basis risk, we find that IBLI reduces exposure to covariate risk due to high loss events by an average of 63%. The benefits of reduced covariate risk exposure are relatively small, however, due to high exposure to seemingly mostly random idiosyncratic risk, even in this population often thought to suffer largely from covariate shocks. The result is that IBLI policyholders are left with an average of 69% of their original risk due to high loss events. This research underscores the need for caution when promoting index insurance as a risk mitigation tool, as well as the importance of product quality evaluation. [ABSTRACT FROM AUTHOR]

In this paper, we explore the application of weather index insurance to plant pest and disease management strategies using two distinct models: (1) insuring crop loss due to disease incidence (“Crop Insurance”) and (2) insuring the use of pesticides (“Pesticide Insurance”). We find that despite the seeming ease of applying weather-based pest incidence models to an insurance product, insuring plant disease incidence models is presently unsuitable for the insurance market for both scientific and behavioral reasons. However, derivative-like applications of weather index insurance to insure pesticide use offer a means to introduce financial leverage into pesticide usage decisions. Risk management with weather index insurance would thus function as a complement to existing risk management strategies using pesticides, and offer a market-based mechanism for pesticide abatement. We conclude that more interdisciplinary collaboration is needed to develop weather index insurance for remuneration of losses due to plant pests and diseases, but weather index insurance offers a potential mechanism to reduce inefficiencies and negative externalities in agricultural markets if pesticide expenditures are insured instead of crop losses. [ABSTRACT FROM AUTHOR]

Most index-based insurance products have been developed without giving explicit attention to gender. However, there is ample of evidence that shocks affect men and women differently and that they allocate resources in different ways. In Bangladesh, it is often assumed that women are less involved in agriculture, and, therefore, agricultural insurance might not be of interest to rural women. However, this assumption has not been tested in the field. This article draws from a field research experiment to examine the gendered aspects of willingness to pay for index-based insurance in Bangladesh. Participants were presented with risky lotteries and a specific insurance contract and were asked to choose how much, if any, of the insurance they wanted to buy at a given price. The probability structure, whether the risk was catastrophic or moderate and whether there was high or low basis risk, varied within sessions. The price of the insurance varied across sessions. Each participant was also given a short questionnaire, which collected information on the demographic characteristics, risk preferences, agricultural risks, knowledge of insurance products, and asset ownership. In the study, 97 percent of the participants decided to buy agricultural insurance, with no significant differences between men and women, even though women were less involved in agricultural decision-making. We found a small decrease in take-up for the low-probability event, driven by the women in the sample. When we examined the number of units bought, we found that men were likely to buy more units than women. Total wealth, as captured by total land owned, had no effect on the units bought. However, among women, total wealth mattered and had a positive correlation. Finally, we found that women had less education and lower financial literacy than their male counterparts, and did not have the experience possessed by men to understand agricultural risks. It placed them at a disadvantage when making insurance purchase decisions. [ABSTRACT FROM AUTHOR]

This article analyzes the demand for a simple rainfall-based weather insurance product among farmers in rural India. We explore the predictions of a standard expected utility theory framework on the nature of demand in terms of price, the basis of the hedge, and risk aversion using data from a randomized control trial. We find that demand behaves as predicted: it falls with price and basis risk and is hump-shaped in risk aversion, with price sensitivity decreasing at higher levels of basis risk. We estimate a negative price elasticity of 0.58 and find that doubling the distance to a reference weather station decreases demand by 18%. These results indicate that improving pricing and quality of insurance products can directly increase demand. In addition, we examine the impact of insurance training relative to other mechanisms designed to increase understanding. The evidence suggests that increased incentives to learn or learning by using are more effective at increasing both understanding and demand. Finally, we contribute to the scarce evidence on the demand for insurance over time. In terms of our main interventions, we find that the effect of premium subsidies persists over time, while the impact of investments in new weather stations diminishes and the effect of increased training in the first season seems to disappear during the second season. Importantly, while having previously purchased insurance does not encourage future uptake, receiving a payout does. This could reflect issues of trust in the product or the insurance company, and constitutes an important topic for future research. [ABSTRACT FROM AUTHOR]

This paper highlights the importance of public data for the development of more efficient and sustainable risk management schemes, such as index insurance, for smallholder agriculture. Three case studies of index insurance-catastrophic weather insurance in Mexico, satellitebased insurance for pastoralists in Kenya, and a hypothetical area-yield insurance scheme in Ecuador-are briefly analyzed in terms of the data and type of index used, the way the contract was designed and implemented (or simulated) and the impacts of the insurance on investment, nutrition and income smoothing. The increasing opportunity to use big data for improving and expanding index insurance is also addressed. The analysis suggests that the strong potential for index insurance to improve the welfare of small farmers represents a clear justification for increased government investment in the collection of the types of data that can facilitate the expansion of index insurance markets. [ABSTRACT FROM AUTHOR]

Index-based insurances offer promising opportunities for climate-risk investments in developing countries. Indeed, contracts conditional on, e.g., weather or livestock indexes can be cheaper to set up than conventional indemnity-based insurances, while offering a safety net to vulnerable households, allowing them to eventually escape poverty traps. Moreover, transaction costs by insurance companies may be additionally reduced if contracts, instead of arranged with single households, are endorsed by collectives of households that bear the responsibility of managing the division of the insurance coverage by its members whenever the index is surpassed, allowing for additional flexibility in what concerns risk-sharing and also allowing insurance companies to avoid the costs associated with moral hazard. Here we resort to a population dynamics framework to investigate under which conditions household collectives may find collective index insurances attractive, when compared with individual index insurances. We assume risk sharing among the participants of each collective, and model collective action in terms of an N-person threshold game. Compared to less affordable individual index insurances, we show how collective index insurances lead to a coordination problem in which the adoption of index insurances may become the optimal decision, spreading index insurance coverage to the entire population. We further investigate the role of risk-averse and risk-prone behaviors, as well as the role of partial correlation between insurance coverage and actual loss of crops, and in which way these affect the original coordination thresholds. [ABSTRACT FROM AUTHOR]

Pastoralist households across East Africa face major livestock losses during drought periods that can cause persistent poverty. For Kenya and southern Ethiopia, an existing index insurance scheme aims to reduce the adverse effects of such losses. The scheme insures individual households through an area-aggregated seasonal forage scarcity index derived from remotely-sensed normalized difference vegetation index (NDVI) time series. Until recently, insurance contracts covered animal losses and indemnity payouts were consequently made late in the season, based on a forage scarcity index incorporating both wet and dry season NDVI data. Season timing and duration were fixed for the whole area (March–September for long rains, October–February for short rains). Due to demand for asset protection insurance (pre-loss intervention) our aim was to identify earlier payout options by shortening the temporal integration period of the index. We used 250 m-resolution 10-day NDVI composites for 2001–2014 from the Moderate Resolution Imaging Spectroradiometer (MODIS). To better describe the period during which forage develops, we first retrieved per-pixel average season start- and end-dates using a phenological model. These dates were averaged per insurance unit to obtain unit-specific growing period definitions. With these definitions a new forage scarcity index was calculated. We then examined if shortening the temporal period further could effectively predict most (> 90%) of the interannual variability of the new index, and assessed the effects of shortening the period on indemnity payouts. Our analysis shows that insurance payouts could be made one to three months earlier as compared to the current index definition, depending on the insurance unit. This would allow pastoralists to use indemnity payments to protect their livestock through purchase of forage, water, or medicines. [ABSTRACT FROM AUTHOR]

Summary Researchers’ efforts to introduce index insurance in developing countries have met with little demand despite its great potential to help farmers mitigate economic risk. I argue that researchers have overlooked institutional context’s critical role in the formation of private markets when designing insurance contracts. Using micro-level evidence from Ethiopia, I show that recipients of a preexisting effective, large-scale public safety net fail to take-up a new highly subsidized private insurance offer. Government safety net programs can decrease demand for private index insurance, forming an additional barrier to index insurance take-up. A direct implication of this research is that policymakers should design private and public insurance products that account for, or even complement, each other. [ABSTRACT FROM AUTHOR]

Summary While index-based microinsurance has attracted considerable attention, uptake rates have been weak in many low-income countries. We explore the purchase patterns of index-based livestock insurance in southern Ethiopia, focusing on the role of accurate product comprehension and price. We find that randomly distributed learning kits improve subjects’ knowledge of the products; however, we do not find strong evidence that the improved knowledge per se causes greater insurance uptake. We also find that reduced price due to randomly distributed discount coupons has an immediate, positive impact on uptake, without dampening subsequent period demand due to reference-dependence associated with price anchoring effects. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to review the most recent scientific literature on the determinants explaining the demand for index-insurance, the impact of index-insurance and the existing links between insurance and credit. In this meta-analysis, the authors identify key discoveries on the potential of index-insurance in enhancing credit supply for smallholders and thus farm productivity. Design/methodology/approach – Following a systematic literature search in Scopus and Web of Science, relevant empirical articles were identified by using the following criteria search algorithm: “insurance” and (“weather” or “micro” or “area?based” or “rain*” or “livestock” or “index”), and ((“empiric*” or “experiment” or “trial” or “RCT” or “impact”) or (“credit” or “loan*” or “debt” or “finance”)). The authors identified 1,133 related papers, 110 of which were selected as closely matching the study criteria. After removing duplicates and analysing each document, 45 papers were included in the current analysis. The framework for addressing insurance and credit issues, in the paper, entails three subsequent themes, namely, adoption of insurance, impact of insurance and links between insurance and credit. Findings – It is not confirmed yet that demand for insurance is indeed hump-shaped in risk aversion and the functional form of this relationship should be tested in more detail. This also holds for the magnitude of the effect of trust and education on actual demand. Furthermore, it is unclear to what extent other risk mitigation strategies form complements or substitutes to index-insurance. Lastly, the interaction between basis risk and price is important to the design of index-insurance products. If basis risk and price elasticity are indeed highly correlated, products that diminish basis risk are crucial in increasing demand. On the impact of bundled products, e.g. combination of insurance and credit, limited empirical research has been conducted. For example, it is unknown to what extent credit suppliers would react to the insured status of farmers or what the preferences of farmers are when it comes to a mix of financial products. In addition, several researchers have suggested that microfinance institutions or banks could insure themselves against covariate risk, yet no empirical evidence about this insurance mechanism has been conducted so far. Research limitations/implications – The authors based the research on scientific literature uploaded in Scopus and Web of Science. Other potentially insightful grey literature was not included due to lack of accessibility. Given the research findings, there is plenty of opportunity for further research particularly with regard to the effects of bundled products, e.g. insurance plus credit, on demand for index-insurance, supply of credit, loan conditions and impact on farm productivity and farmers’ well-being. Practical implications – Microfinance institutions, insurance companies, NGOs, research institutions and universities, particularly in developing countries, will be interested to learn about the systematic review of scientific research done in the area of insurance and credit for agriculture and the possibilities for application in their own practice of supplying these financial products. Social implications – A rigorous understanding of the potential of index-insurance and credit is essential for identifying the right mix of financial products that help smallholder farmers to increase farm productivity and their own well-being. Originality/value – The paper is valuable due to its rigorous evaluation of existing theoretical and empirical research around issues explaining the degree of adoption and impact of index-insurance and that of bundled financial products (i.e. index-insurance plus credit). The paper has the potential to become essential reading for academics, practitioners and policy-makers interested in researching and putting in practice the best options leading to greater farm productivity and well-being in developing countries. [ABSTRACT FROM AUTHOR]

Low water levels in the Great Lakes have recently had significant financial impacts on the region's commercial shipping, which transports hundreds of millions of dollars' worth of bulk goods each year. Cargo capacity is a function of a ship's draft, the distance between water level and the ship's bottom, and lower water levels force ships to reduce cargo loads to prevent running aground in shallow harbors and locks. Financial risk transfer instruments, such as index-based insurance contracts, may provide an adaptable method for managing these financial risks. In this work, a relationship between water levels and shipping revenues is developed and used in an actuarial analysis of the frequency and magnitude of revenue losses. This analysis is used to develop a standardized suite of binary financial contracts, which are indexed to water levels and priced according to predefined thresholds. These contracts are then combined to form hedging portfolios with different objectives for the shippers. Results suggest that binary contracts could substantially reduce the risk of financial losses during low lake level periods and at a relatively low cost of only one to three percent of total revenues, depending on coverage level. [ABSTRACT FROM AUTHOR]