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Innovations for Poverty Action (IPA) 2015

Insurance Against Cognitive Droughts : The Psychology of Water Scarcity and Insurance Brazil

Insurance - droughts

Innovations for Poverty Action

Titre : Insurance Against Cognitive Droughts : The Psychology of Water Scarcity and Insurance Brazil

Région /Pays : Brésil

Date : 2015

Contexte
In Ceará, in Northeast Brazil is poorer than average (per capita income of BRL 616 in 2010, compared to Brazil’s average of BRL 1052), and drought prone - 60 percent of municipalities had below-normal rainfall between 2011 and 2015. In 2013, all municipalities except the state capital received emergency funds from the federal government to support the estimated 1.8 million family farmers living in the state. In response to the high prevalence of drought, the Brazilian federal government operates a rainfall insurance program to help farmers in the case of extreme, municipal-wide agricultural losses. The standard plan provides farmers with BRL 170 (US$65) per month for five months if agricultural losses in the municipality are greater than 50 percent of the expected harvest ; this is a significant sum in an area where about 80 percent of surveyed farmers earned less than US$100 per month. Approximately 90 percent of farmers in the state are enrolled in this insurance plan

Présentation _ Researchers partnered with Ceará State’s Foundation for Meteorology and Water Resources and the Rural Development Secretariat of Ceará to evaluate the cognitive impacts of exposure to rainfall risk and of a supplemental insurance program. The study recruited 4,087 farmers across 47 municipalities in Ceará to participate in the study ; of these, 2,822 participated in at least one mobile-phone based survey. Participants were surveyed six times over the phone through an interactive voice response system. During each call, half of the participants were randomly selected listen to a message designed to “prime,” or remind, them about the effects of drought in their municipality. The other half of participants listened to a neutral message. Through a separate set of phone calls, researchers offered the free supplemental insurance program to 1,192 randomly selected farmers. The product would pay out an additional BRL 170 (US$65) to farmers, on top of the payments they receive from the existing public insurance program, in municipalities that suffered greater than 70 percent harvest losses. This payout would come in June, two months before the (more generous) government payout in August. Researchers measured the effects of exposure to rainfall risk and risk mitigation through the insurance product on farmers’ performance on a set of cognitive tasks.

Programme  : Financial Inclusion Financial Services for the Poor Small and Medium Enterprises

Partenaires  : Ceará State’s Foundation for Meteorology and Water Resources (FUNCEME) MGov Brasil Rural Development Secretariat of Ceará State

Innovation for Poverty Action (IPA)

Page publiée le 31 mai 2017, mise à jour le 13 octobre 2017