Weather hazards cause significant hardship for small-holder farmers, and climate change is expected to further exacerbate vulnerabilities to extreme weather. Expectations of possible losses could discourage farmers from making productivity-enhancing investments and trap them in low-risk but low-return agriculture. In Kenya, the Agriculture and Climate Risk Enterprise (ACRE) and the Kenya Agricultural and Livestock Research Organization (KALRO) are implementing an intervention to improve agricultural productivity.

Farmers depend heavily on weather patterns and forecasts to make important decisions regarding their investments, such as determining the optimal timing for planting and harvesting crops or deciding whether to purchase index insurance to protect against adverse events. However, weather information is often unreliable, which can lead to significant negative consequences for farmers when the forecasts turn out to be incorrect. In collaboration with ignitia, researchers in Ghana are evaluating the impact of text messaging services providing weather forecast advisories on farmers’ investment decisions and outcomes.

Farmers across the developing world face risk from hazards such as weather, pests, and crop disease, but largely lack insurance to manage these risks. One reason for this lack of viable insurance products may be that farmers know their plots and risks better than insurers, and react accordingly. In the Philippines, researchers offered insurance on randomly assigned plots to farmers, and found that farmers preferred to insure the plots that faced more risk. Farmers also invested less in fertilizer for insured plots, and those plots suffered from more preventable (pests and crop disease) than natural (flood and typhoon) damage. The findings suggest that information that is unavailable (at least in part) to insurance providers—the susceptibility of agricultural plots to damage and farmers’ effort to prevent damages—may be a substantial barrier to the functioning of crop insurance markets.