Weather Based Crop Insurance Scheme

This paper is part of the author's PhD work submitted to the Centre for Studies in Science Policy Jawaharlal Nehru University, New Delhi. The author would like to thank the reviewers for their comments, Rohan D’Souza, Saradindu Bhaduri and Ambuj Sagar as also the Centre for Social Markets, Coffee Board of India, Karnataka Growers’ Federation, Hassan District Planters’ Association, United Planters’ Association of Southern India and Karnataka Planters’ Association for their help in the field.

This paper is part of the author’s PhD work submitted to the Centre for Studies in Science Policy Jawaharlal Nehru University, New Delhi. The author would like to thank the reviewers for their comments which were immensely helpful. The author is grateful to Rohan D’Souza, Saradindu Bhaduri and Ambuj Sagar as also the Centre for Social Markets, Coffee Board of India, Karnataka Growers’ Federation, Hassan District Planters’ Association, United Planters’ Association of Southern India and Karnataka Planters’ Association for their help on the field.

In 2009, the Government of India directed all the state governments and union territories to prepare the State Action Plan on Climate Change (SAPCC) as a strategy for addressing climate change. These SAPCCs are now available on the website of the Ministry of Environment, Forest and Climate Change (MoEFCC). Out of the 32 SAPCCs available online, 23 of them explicitly mention the Weather Based Crop Insurance Scheme (WBCIS) as a strategy to address the impact of climate change on agriculture.

It is argued that this format of agricultural insurance was first introduced in India by J S Chakravarti in 1920 (Mishra 1995). Chakravarti (1920) proposed a rainfall insurance scheme for Mysuru state to protect farmers from drought. The defining characteristic of WBCIS is indexing weather. Here, the insurance contract responds to an objective parameter (such as measurement of rainfall or temperature), at a defined weather station during an agreed time period. The parameters are set so as to correlate, as accurately as possible, with the loss of a specific crop suffered by the policyholder. All policyholders within a defined area receive payouts based on the same contract and measurement at the same station, eliminating the need for in-field assessment (Dick and Stoppa 2011: 18). The main features of this insurance format are as follows: (i) a specific meteorological station which is named as the reference station, (ii) a trigger weather measurement (such as cumulative millimetres [mm] of rainfall), at which the contract starts to pay out, (iii) a lump sum or an incremental payment, (iv) a limit of the measured parameter is set (example, cumulative rainfall), at which a maximum payment is made, and (v) the period of insurance is stated in the contract and coincides with the crop growth period; it may be divided into phases (typically three), with each phase having its own trigger, increment and limit.