Toward the development of a weather index insurance for rice farmers in the coastal region of Myanmar

Abstract

Climate change is expected to exacerbate damage to agricultural production from natural disasters. Examination of measures to adapt to the damage represents an urgent matter for agriculture. A multidisciplinary research project aimed at providing effective information related to development a weather index insurance (WII) system was conducted for rice farmers in a coastal region of Myanmar to achieve sustainable rice farm management in the country, which is among the world’s poorest and most disaster prone. For lower income countries, WII is one adaptation measure to mitigate damage by climate change. Using remote sensing and statistical data, changes in tracks of cyclones in the Bay of Bengal, the duration of damage by cyclone disasters, and areas affected by saltwater intrusion were analyzed to ascertain risk levels for disasters in the target area: Labutta township in the Ayeyarwady region. Furthermore, demand analysis of WII using discrete choice experiments, a question-based statistical survey method, revealed that farmers’ demand of WIIs for cyclone landfall, flood, and drought is relatively greater than that for saltwater intrusion. This finding indicates that saltwater intrusion might not be a crucially important matter for farmers who cultivate rainfed rice, whereas inland water floods caused by cyclone landfall and drought caused for changing the weather patterns represent a threat for these farmers. Results of econometric model analysis for designing a WII indicate that if a regular farmer in the township were to pay 41.5 US dollars per year to purchase WII for flood damage, their expected income will be stable.