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Paper short abstract:

This study investigates the determinants of weather index-based insurance adoption among crop farmers in Ghana. It identifies key factors such as trust in financial institutions, perceived risk, and public policy perceptions that influence farmers' willingness to participate in insurance programs.

Paper long abstract:

In Sub-Saharan Africa, agricultural insurance is crucial for mitigating the climatic risks faced by farmers, yet adoption rates remain low in Ghana. This research explores the factors influencing crop farmers' demand for weather index-based insurance. Utilizing the theory of planned behavior (TPB), the study examines variables including trust in financial institutions, risk perception, and views on policy interventions. A quantitative approach was employed, surveying 203 farmers across Ghana's Northern and Southern Savanna regions using a purposive sampling technique. Ordered Probit econometric models were applied to identify determinants affecting insurance demand. The findings reveal that trust in financial institutions and positive perceptions of public policy significantly enhance the likelihood of adopting weather index insurance. Conversely, a high perception of risk negatively impacts demand. Notable differences were observed based on agroecological zones, crop type (maize), farming experience, and educational background. The results suggest that enhancing trust and improving perceptions of policy effectiveness could foster greater participation in weather index insurance. The study recommends that policymakers focus on infrastructure improvements and quality weather data to support farmers and suggests further research on savings and credit access related to insurance adoption.