Willingness to pay for crop insurance in Tolon District of Ghana: Application of an endogenous treatment effect model

Abstract

The purpose of this study was to assess the factors affecting farmers’ awareness of and willingness to pay for crop insurance in Tolon District of Ghana. The study was guided by the following objectives: (1) to determine farmers’ level of awareness of crop insurance, (2) to analyse the factors affecting awareness of crop insurance and (3) to identify the factors that affect willingness to pay for crop insurance. Data was collected from 150 respondents from three farming communities in the Tolon District. Questionnaires were used as instruments for data collection. The computer software package STATA version 15 was used to analyse the quantitative data. Farmers’ level of awareness of crop insurance was described descriptively while an endogenous treatment effect model was used to analyse the factors affecting awareness and willingness to pay. The result indicated that 48% of the respondents were aware of crop insurance. The results showed that sex of the farmer, extension training and adoption of good agriculture practices were significant factors affecting awareness of crop insurance. Also, willingness to pay for crop insurance was influenced by household size, years of farming experience, farm size and respondent’s awareness of crop insurance. The study concluded that increasing awareness of crop insurance is an effective way to enhance farmers’ willingness to pay. Hence, any intervention to promote adoption of crop insurance should target awareness campaign in order to increase the level of awareness especially among male farmers.