Determinants and framework for implementing sustainable climate-smart aquaculture insurance system for fish farmers: Evidence from Ghana

Abstract

The just-ended Sharm El-Sheikh Climate Change Conference in November 2022 brought to light the need to mitigate climate change adaptation related to risk and challenges through Climate financing, has made it very paramount the need to protect fish farmers' investments from climate change-related risk through the development of climate-smart insurance products and covers to help mitigate climate change effects on aquaculturists. As a result, this paper examines aquaculture farmers' preference for climate-smart aquaculture insurance products, challenges of climate-smart aquaculture insurance, and their preferred insurance cover. Survey data was collected from 140 fish farmers and analysed via Multinomial logistic regression, Bivariate Probit regression and Kendall's coefficient of concordance. Climate-Induced Aquaculture Stock Mortality Insurance (CIASMI) was the most-preferred climate-smart insurance product. Insurance Cover for Diseases (ICD) was the least preferred. The results further indicated that membership in a farmer organisation, farm income, credit access, climate-related peril and anthropogenic-related peril had a positive influence, whereas years of education had a negative influence on climate-smart aquaculture insurance participation.Moreover, production system had a negative relationship with mode of participation while number of employees, farm income and climate-related peril influenced mode of participation positively. The results also revealed that age, sex, stock size, awareness, income, climate and environmental-related peril, and anthropogenic-related peril significantly influenced the choice for climate-smart aquaculture insurance products, specifically climate risk related to stock mortality insurance and climate-related to consequential loss insurance. Finally, delay in claim settlement was the most pressing constraint. In contrast, lack of experts in disease diagnosis was the least ranked constraint of climate-smart aquaculture insurance. Therefore, this study provides insights for the Fisheries Commission, Ghana Agricultural Insurance Pool (GAIP), World Cover and other agricultural insurance companies globally to draft climate-smart insurance products for aquaculturists.