The Spillover Impact of Index Insurance on Agricultural Investment by Cotton Farmers in Burkina Faso

Stoeffler Q., Carter M., Guirkinger C., Gelade W.

WORLD BANK ECONOMIC REVIEW, vol.36, no.1, pp.114-140, 2022 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 36 Issue: 1
  • Publication Date: 2022
  • Doi Number: 10.1093/wber/lhab011
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, CAB Abstracts, EconLit, Geobase, Index Islamicus, PAIS International, Political Science Complete, Public Affairs Index, Sociological abstracts, Worldwide Political Science Abstracts
  • Page Numbers: pp.114-140
  • Keywords: index insurance, Burkina Faso, productive investments, randomized evaluation, mixed-methods, BASIS RISK, POVERTY TRAPS, CROP INSURANCE, MORAL HAZARD, BASE-LINE, DEMAND, CONSUMPTION, AFRICA, STRATEGIES, DECISIONS
  • Istanbul Technical University Affiliated: Yes


This paper examines whether agricultural insurance can boost investment by small scale farmers in West Africa. It is based on a randomized evaluation designed to analyze the impacts of index insurance for cotton farmers in Burkina Faso. No impact of insurance was found on cotton, but, consistent with microeconomic theory, significant spillover impacts on investment in other agricultural activities were measured. Furthermore, the effects of insurance payouts on farmers hit by a shock confirm the potential of index insurance as a risk-management tool. However, this research uncovers important flaws in the implementation of the project that limited its impact on cotton. Overall, this study suggests a promising role for index insurance in stimulating investment, but also draws attention to key challenges to the efficient delivery of insurance to small farmers. Finally, the study's hybrid, mixed methods RCT offers lessons for the evaluation of complex interventions where trust, understanding, and timing are all important.