Crop insurance as a climate risk management tool: Evidence from three districts of Punjab, Pakistan
Muhammad Khan, Kabir Ahmad Sidhu, Yasir Majeed Waraich, Wafa Ghardallou
TL;DR
This study examines why farmers in Punjab, Pakistan, are not using crop insurance despite climate risks, finding low awareness and reliance on informal coping strategies.
Contribution
The paper provides one of the first systematic assessments of crop insurance adoption and climate risk perceptions in Pakistani agriculture.
Findings
84% of farmers perceive climate hazards as major threats, but only 21% are aware of crop insurance.
Education and financial inclusion significantly increase the likelihood of insurance awareness.
Farmers rely on informal credit networks due to their accessibility and trust-based nature.
Abstract
Pakistan’s agricultural sector is increasingly vulnerable to climate change–induced shocks, posing serious risks to farm incomes and rural livelihoods. Although crop insurance has been promoted as a key risk-mitigation instrument, and several public and private schemes have been introduced—particularly in Punjab—farmer participation remains strikingly low. This study provides one of the first systematic assessments of farm households’ perceptions of climate-related risks, their awareness of crop insurance, and the coping mechanisms they adopt in response to climatic shocks. The analysis draws on primary survey data from 324 farmers across 27 mouzas (villages) in the districts of Bahawalpur, Gujrat, and Faisalabad. Descriptive findings reveal a pronounced perception–adoption gap: while 84% of respondents view climate hazards as a major threat to agriculture, only 21% are aware of crop…
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Taxonomy
TopicsAgricultural risk and resilience · Climate change impacts on agriculture · Agricultural Innovations and Practices