Determinants of livestock insurance adoption in Nepal

Abstract

Livestock insurance, an important risk management tool, is becoming popular in Nepal after Crop and Livestock Insurance Directives, 2013, came into action. To widen the adaptability of the insurance throughout the country, key determinants of insurance adoption need proper investigation. We designed this study to identify the factors that influence farmer's decisions in adopting livestock insurance. Primary data were collected from 415 respondents including 245 livestock insured and 170 non-insured farmers. Probit regression model using STATA15 was employed to analyze factors influencing livestock insurance adoption. The regression result revealed that the probability of insurance adoption significantly increases with farmers having membership in groups or cooperatives, raising awareness, and rearing improved animal. Intensifying public awareness campaigns through a combined effort of all the stakeholders including local government authorities, broadcasting media, insurance companies, and farmer's groups or cooperatives is necessary for insurance uptake in the farming community. Provision of insurance through farmers' group or cooperatives making them a formal insurer agent is required for wider adoption of livestock insurance in Nepal. Subjects: Agriculture & Environmental Sciences; Agriculture; Agriculture and Food Deepa Devkota ABOUT THE AUTHOR Deepa Devkota is a scientist based at the Nepal Agricultural Research Council (NARC) where she works as an agricultural economist for the last six years. Her research interest lies in the adoption and impact assessment of agricultural technologies. She worked for Pilot Program for Climate Resilience (PPCR) project funded by the World Bank with the research focus on the adoption of agriculture insurance in Nepal. Livestock insurance is an effective risk management tool.However, several aspects of the adoption of livestock insurance by the farmers have been poorly understood. This paper will contribute to an increased understanding of the factors influencing adoption decisions of livestock insurance which have become quite relevant to extend its adoption through better policy actions in Nepal.

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