The effect of agricultural insurance participation on rural households' economic resilience to natural disasters: Evidence from China

Abstract

This study aims to investigate the effects of agricultural insurance on household economic resilience among rural households in China. To this end, this research derives data from the 2020 Guanzhong Plain Farm Household Survey and uses the Ordinary Least Squares (OLS) model, mediated effects model, and heterogeneity test. The results of the OLS model show that agricultural insurance exerts a substantial and positive influence on household economic resilience, with each unit of increase in the participation of farmers' households in agricultural insurance causing a 10.8% increase in household economic resilience. In addition, estimations of the mediated effects models reveal that agricultural insurance profoundly bolsters the economic resilience of rural households by effectively spreading risks, facilitating credit access, and augmenting income generation capabilities. Moreover, the heterogeneity analysis showed that agricultural insurance participation has a more significant effect on the economic resilience of cash crop households. The mediated effects result also indicate that agricultural insurance by large farmers plays a stronger role in promoting household economic resilience. These findings have policy implications for improving the agricultural insurance system, reinforcing the risk resilience among rural families, and advancing rural economic development.