Index insurance has been heralded as a potential solution to risk management problems
faced by smallholder farmers in developing countries. Despite its potential, demand for
standalone index insurance contracts has remained low in early field trials. We investigate
the willingness to pay for drought index insurance‐backed loans in northern Ghana using
contingent valuation. We find that index insurance lowers overall demand for agricultural
loans. We also compare micro‐level index insurance, provided directly to farmers, with meso …

Index insurance has been heralded as a potential solution to systemic risks faced by
smallholder farmers in developing countries by covering risks such as drought, low crop
yields, and low market prices. Despite its potential, demand has remained low in many early
experiments and field trials. Little research has been done, however, on demand for
insurance as it is coupled with other services such as loans. Here, willingness to pay for
drought index insurance backed loans is investigated using contingent valuation …