Abstract
Managing the risk associated with natural disasters is crucial for agricultural development in developing countries. In this study, we estimate farmers’ willingness to pay (WTP) for a hypothetical excess rainfall index insurance contract, with a special interest in whether recent experience with a catastrophic flooding influences farmers’ attitude towards the insurance product. The study is based on a survey of small farm households in China's Heilongjiang Province, which suffered a catastrophic flood in the summer of 2013. Employing a natural experiment framework, we find that, other things being equal, farmers from flooded areas have a higher WTP for index insurance than farmers from non-flooded areas.
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