Ecuador and several other Andean countries have prioritized the establishment and strengthening of agricultural insurance markets for smallholder farmers at risk of poverty. At the request of the Ecuadorian government, we recently explored whether index insurance would more effectively protect these farmers than the conventional insurance the government partially subsidizes. We found that for most farmers, area yield index insurance would have performed equally well or much better at the same dollar-for-dollar cost. The widely shared climate-related risks and the existing national agricultural production survey can in many countries provide the basis for an effective index insurance-based national risk-management program for rural development.
