Demand for Price Insurance among Farmers in India: A Choice Experiment-based Approach

Using choice experiments, we estimate the willingness to pay for price insurance among cotton and paddy farmers in the Indian state of Gujarat. We also identify the interactions between the demand for price insurance and existing informal and formal risk management mechanisms. Our results indicate that cotton farmers value price insurance more than paddy farmers. Also, most of the existing informal risk management strategies seem to have a positive effect on the demand for price insurance, suggesting potential complementarities. Important policy implications on the design and bundling of innovative financial products follow from our findings. JEL Classification: D81, D01, G13