Research project: Rigorous Impact Evaluation of the Trigger-Based Agricultural Micro Insurance in Vietnam

Parametric agricultural insurance for smallholder farmers is currently discussed in the policy community with great expectations. It is hoped that parametric agricultural insurance is an effective, scalable, and cost-efficient instrument that could enhance the resilience of millions of farmers in the Global South to potentially devastating climate risks, such as droughts, floods, and storms. Yet, important questions remain that hinder the development of the insurance sector. First, does parametric insurance have the expected benefits for farm households? Second, how can the uptake of (parametric) insurance be stimulated?

The research project focuses on a parametric agricultural insurance in Vietnam that is being implemented by an investee of a fund supported by German Financial Cooperation. This market-ready insurance product shall be scaled up to the national level in the coming years. The research project aims at generating methodologically rigorous evidence in four areas:

• whether parametric insurance enhances households’ climate resilience,
• whether premium discounts encourage insurance uptake,
• whether training on product understanding encourages insurance uptake, and
• whether providing households with access to climate projections encourages insurance uptake.

We will combine unique existing data – a household panel survey with eight waves serving as baseline data – with several Randomized Controlled Trials.

This project is supported by DEval with funds from the German Federal Ministry for Economic Cooperation and Development (BMZ).