1. for internal use only Presentation by Shahid Vaziralli, Head – Impact Evaluation, Center for Microfinance, IFMR January 12, 2011 Impact Evaluation of Rainfall Insurance: Our Policy Outreach Strategy

2. 2 for internal use only Context  Agriculture is the primary livelihood activity for 2/3 of Indians – 800m people  Almost 70% of all Indian farms are rainfed – 560m people  Almost 90% of them cite unpredictable or inadequate rainfall as the major risk in their lives – 500m people  Studies have shown variations in rainfall to be the primary determinant of crop yields  Traditional area based crop insurance (NAIS) in India has been a failure  Due to lack of good risk mitigating instruments, farmers employ low risk – low return investment choices

3. 3 for internal use only The Promise of Index Based Insurance  Quick payouts  Easy to Administer  Low Transaction Cost  Publicly observable  Traditional area based crop insurance (NAIS) in India has been a failure  Basis Risk  Complicated to Understand

4. 4 for internal use only The Motivation for Research  What are the factors of demand?  How should we price policies?  How should we market policies?  How should we design policies?  Will it improve people’s lives?

5. 5 for internal use only Results  The demand for insurance is extremely price sensitive  Trust and financial literacy are major barriers to demand  Insured farmers switched to riskier cash crops

6. 6 for internal use only Policy Influence Strategy  Strong institutional partnerships between researchers and implementer  Agencies must be relevant and powerful  They must be invested in the results of the study  Trust  Open communication and feedback  Examples: Policy design, marketing  Dissemination  Conferences, publications etc  Targeted approach  Examples of high impact RCTs that may never affect public policy due to lack of strong partnership  Trust and financial literacy are major barriers to demand  Insured farmers switched to riskier cash crops