Agricultural index insurance has big impacts for farmers in Burkina Faso

A devastating drought or other shock can force small-scale farmers in developing economies to sell off assets or cut meals and other consumption to cope. Even the risk of a shock can stifle their future by pushing them to underinvest in profitable but risky activities like cotton farming. In a randomized controlled trial (RCT) in Burkina Faso, found that farmers who purchased insurance made significantly more investments for higher future income despite implementation challenges, adding evidence for the high potential of agricultural microinsurance for development.