Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica.

To cope with losses from extreme hydro-meteorological events, governments typically implement disaster relief programs and offer debt relief to affected parties. Governments in developing countries have made extensive use of total and partial debt coverage as a way to encourage investment in key sec...

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Autores principales:	Naranjo, Maria Angelica, Pieters, Janneke, Alpízar, Francisco
Formato:	Artículo
Lenguaje:	Inglés
Publicado:	2020
Materias:	CAMBIO CLIMÁTICO AGRICULTURA PRODUCTORES DE CAFÉ PROBABILIDAD HIDROMETEOROLOGIA CREDITO FINANCIAMIENTO PRESTAMOS VULNERABILIDAD COSTA RICA
Acceso en línea:	https://repositorio.catie.ac.cr/handle/11554/9510

id	RepoCATIE9510
record_format	dspace
spelling	RepoCATIE95102021-12-22T19:09:49Z Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica. Naranjo, Maria Angelica Pieters, Janneke Alpízar, Francisco CAMBIO CLIMÁTICO AGRICULTURA PRODUCTORES DE CAFÉ PROBABILIDAD HIDROMETEOROLOGIA CREDITO FINANCIAMIENTO PRESTAMOS VULNERABILIDAD COSTA RICA To cope with losses from extreme hydro-meteorological events, governments typically implement disaster relief programs and offer debt relief to affected parties. Governments in developing countries have made extensive use of total and partial debt coverage as a way to encourage investment in key sectors and in agriculture in particular. In the context of climate change, such practices are not viable because risk is systemic and losses can easily surpass most governments’ debt relief budgets. Insurance is an obvious alternative, but insurance uptake in developing countries is typically low, and little is known about the interaction between investment, insurance, and debt relief programs, which effectively reduce borrowers’ liability. This paper examines the effect of farmers’ liability on demand for credit with and without insurance. We test predictions of a theoretical model in a lab in the field experiment with coffee farmers in Costa Rica. Farmers choose how much to invest in six different settings, described on the one hand by whether the loan is insured or not, and on the other by the probability that the government provides full debt relief. As expected, uptake of loans with insurance is significantly higher than without insurance when farmers are fully liable, and insurance is not relevant for investments if debt relief is guaranteed. Interestingly, uncertainty about liability is enough to trigger the uptake of insured debt. Our results suggest that well-defined rules for disaster relief are needed to support development of insurance markets. 2020-08-24T23:02:57Z 2020-08-24T23:02:57Z 2017-03 Artículo https://repositorio.catie.ac.cr/handle/11554/9510 en Environment for Development (March 2017) info:eu-repo/semantics/openAccess application/pdf
institution	Centro Agronómico Tropical de Investigación y Enseñanza
collection	Repositorio CATIE
language	Inglés
topic	CAMBIO CLIMÁTICO AGRICULTURA PRODUCTORES DE CAFÉ PROBABILIDAD HIDROMETEOROLOGIA CREDITO FINANCIAMIENTO PRESTAMOS VULNERABILIDAD COSTA RICA
spellingShingle	CAMBIO CLIMÁTICO AGRICULTURA PRODUCTORES DE CAFÉ PROBABILIDAD HIDROMETEOROLOGIA CREDITO FINANCIAMIENTO PRESTAMOS VULNERABILIDAD COSTA RICA Naranjo, Maria Angelica Pieters, Janneke Alpízar, Francisco Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica.
description	To cope with losses from extreme hydro-meteorological events, governments typically implement disaster relief programs and offer debt relief to affected parties. Governments in developing countries have made extensive use of total and partial debt coverage as a way to encourage investment in key sectors and in agriculture in particular. In the context of climate change, such practices are not viable because risk is systemic and losses can easily surpass most governments’ debt relief budgets. Insurance is an obvious alternative, but insurance uptake in developing countries is typically low, and little is known about the interaction between investment, insurance, and debt relief programs, which effectively reduce borrowers’ liability. This paper examines the effect of farmers’ liability on demand for credit with and without insurance. We test predictions of a theoretical model in a lab in the field experiment with coffee farmers in Costa Rica. Farmers choose how much to invest in six different settings, described on the one hand by whether the loan is insured or not, and on the other by the probability that the government provides full debt relief. As expected, uptake of loans with insurance is significantly higher than without insurance when farmers are fully liable, and insurance is not relevant for investments if debt relief is guaranteed. Interestingly, uncertainty about liability is enough to trigger the uptake of insured debt. Our results suggest that well-defined rules for disaster relief are needed to support development of insurance markets.
format	Artículo
author	Naranjo, Maria Angelica Pieters, Janneke Alpízar, Francisco
author_facet	Naranjo, Maria Angelica Pieters, Janneke Alpízar, Francisco
author_sort	Naranjo, Maria Angelica
title	Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica.
title_short	Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica.
title_full	Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica.
title_fullStr	Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica.
title_full_unstemmed	Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica.
title_sort	credit, insurance, and farmers’ liability: evidence from a lab in the field experiment with coffee farmers in costa rica.
publishDate	2020
url	https://repositorio.catie.ac.cr/handle/11554/9510
work_keys_str_mv	AT naranjomariaangelica creditinsuranceandfarmersliabilityevidencefromalabinthefieldexperimentwithcoffeefarmersincostarica AT pietersjanneke creditinsuranceandfarmersliabilityevidencefromalabinthefieldexperimentwithcoffeefarmersincostarica AT alpizarfrancisco creditinsuranceandfarmersliabilityevidencefromalabinthefieldexperimentwithcoffeefarmersincostarica
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Credit, Insurance, and Farmers’ Liability: Evidence from a Lab in the Field Experiment with Coffee Farmers in Costa Rica.

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