Can a weather-based crop insurance scheme increase the technical efficiency of smallholders? A case study of groundnut farmers in India

Abstract

This paper analyzes the impact of a Weather-Based Crop Insurance Scheme (WBCIS) on the Technical Efficiency (TE) of smallholder groundnut farmers in the context of climate change in India. We use Data Envelopment Analysis (DEA) to study the TE of smallholder farmers, which range between 0.58 and 1, with a mean of 0.79. Using the Propensity Score Matching (PSM) technique, we find that the TE of smallholder farmers improves when they participate in a WBCIS using three matching methods. Increasing the coverage of farmers under a WBCIS can help in reducing smallholder farmers vulnerability to climate change.