| Crop insurance is the most common risk management instrument that farmers can use to mitigate crop farming losses caused by adverse natural and market conditions.In developed countries,crop insurance programs are often subsidized by the government to provide income transfer to farmers,to help the insurance industry combating systemic risks,and to enhance national food security indirectly.Crop yield insurance and weather index insurance target yield loss caused by weather,and crop revenue insurance mitigates risks caused by both weather and the market price.In developing countries,similar insurance programs are considered by governments and international NGOs but are often weakly subsidized with lower liabilities and lower premiums,and with smaller scales than their counterparts in developed countries.The farm size is often much smaller and farmers' knowledge about risk management and experience and understanding of insurance are also quite limited.The choice experiment method has become very popular in the last decade in the WTP analysis of individual preferences for nonmarket or hypothetical goods and for consumers' preferences for food attributes related to food safety and the environment.Studies on producers' preference of production and management technology using choice experiment is limited.In this study,we employ a labeled choice experiment to estimate farmers' WTP for alternative crop insurance programs,using corn growers in Liaoning province as a case study.We investigate the four alternative insurance programs,yield insurance,revenue insurance,price insurance and index insurance,treating premiums after subsidy,liability,ownership of insurance company,and the ease of indemnity payment procedure as four attributes of the insurance products.This is the first study applying labeled choice experiment method to analyze the consumer demand of crop insurance.A survey was conducted in late November 2017 for farmers in randomly selected 10 villages in four counties in Liaoning province.Open-ended questions and iterative biddings were employed for the contingent valuation part while the labeled choice experiment was designed using a D-Optimal criterion in SAS,and eight choice experiments are provided to each survey participants.In each experiment,all four types of insurance contracts each with experimentally designed attribute levels and a fifth choice of not participating on any the four insurance contracts are included for the farmer to choose.We have 1584 observations finally and employ Random Parameter Logit(RPL)model to estimate farmers' WTP for each attribute of the alternative types of insurance.Farm characteristics,farmers' demographic characteristics and risk attitudes are also asked in the survey for the further analysis of influencing factors.Results show famers are willing to pay more for the yield insurance with higher coverage levels than current programs.While maintaining the subsidy level unchanged,the potential market of newly designed crop insurance products exists due to farmers' demand.However,the traditional yield insurance still remains as the most popular product in the insurance market though new insurance products together enjoy relatively bigger market share in the simulated market.Furthermore,Farmers prefer crop insurance contract from government-related insurance company with fast indemnity payment.Whether the respondent is the decision maker of his/her family,age,education level and risk attitude have a great impact on his/her willingness-to-pay for crop insurance. |
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