The impact of weather index insurance on agricultural technology adoption evidence from field economic experiment in China

Abstract

PurposeThe purpose of this paper is to empirically investigate the impact of weather index insurance on agricultural technology adoption in rural China.Design/methodology/approachA field experiment was conducted with 344 rural households/farmers in Heilongjiang and Jiangsu Provinces, China. DID model was used to evaluate farmers’ technology adoption with and without index insurance.FindingsThe results show that weather index insurance has a significant effect on the technology adoption of rural households; there is a regional difference in this effect between Heilongjiang and Jiangsu. Weather index insurance promotes technology adoption of rural households in Heilongjiang, while has limited impact on those in Jiangsu. Weather, planting scale and risk preference are also important factors influencing the technology adoption of rural households.Research limitations/implicationsThis research is subject to some limitations. First, the experimental parameters are designed according to the actual situation to simulate reality, but the willingness in the experiment does not mean it will be put into action in reality. Second, due to the diversity of China’s climate, geography and economic environment, rural households are heterogeneous in rural China. Whether the conclusion can be generalized beyond the study area is naturally questionable. A study with more diverse samples is needed to gain a fuller understanding of index insurance’s effects on farmers in China.Originality/valueThis research provides a rigorous empirical analysis on the impact of weather index insurance on farmers’ agricultural technology adoption through a carefully designed field experiment.