Alex Armand and Joseph Gomes, researchers at the Navarra Center for International Development (NCID), have been awarded a grant for the initial phase of the 3ie Thematic Window on Agricultural Insurance. The project proposes to better understand the role of agricultural insurance in Bolivia, as it could, hypothetically, alleviate climate concerns for Bolivian farmers and incentivize investment and consumption.
This topic is of great relevance for developing countries as financial uncertainty has deep repercussions on both householdsâ€™ welfare and investment in productive activities. In Bolivia, more than 30% of the labor force works in agriculture. Moreover, according to the last available agricultural census, 94% of Bolivian productive units are owned by families whose output surpasses six million tons. Thus, being of great importance for food security in Bolivia.
However, producers are faced with growing climate risk which is only worsened by high altitudes. The Inter-American Development Bank estimates that, in 2100, assuming a moderate climate change scenario, climate-related losses will be 12%. Under a worse scenario, losses could reach 50%. A United Nations report estimates that, over the last decade, El NiÃ±o has generated losses between 400 and 500 million dollars. Furthermore, the Bolivian population is affected by high poverty rates, which is reflected in the lowest GDP per capita in South America, 3,096.8 USD. Therefore, uncertainty about the returns to agricultural investments, especially for smallholder farmers, can have significant impacts on the decisions and the welfare of the poorest families.
On February 7th, a workshop organized by NCID will take place in La Paz, Bolivia. Alex Armand and Joseph Gomes, along with Bolivian research assistant and collaborator, Sergio Daga, will be present. The attendance and participation of various relevant agents in the agricultural insurance sector is confirmed.