The Impact of Agricultural Index Insurance on Farmers' Welfare and Climate Resilience: Findings From Uzbekistan

Farmers need to urgently adapt to changing climate conditions for sustainable rural livelihoods. Index insurance is often discussed as a promising climate adaptation strategy. Yet, a clear differentiation between ex-ante (insured but no damage) and ex-post (payout) impacts of index insurance is still scarce. Using a framed field experiment, we analyse ex-ante and ex-post impacts of index-based crop insurance on indicators of welfare and climate resilience among rainfed farmers in Uzbekistan. Results suggest that index insurance induces positive ex-ante and ex-post effects on all measured outcomes (consumption, fertiliser, savings and farm wealth). Furthermore, it reduces the need for credits by strengthening financial climate resilience after droughts. Our results contribute to assessing the efficacy of index insurance and its implications on rural welfare.