Intensity of crop and livestock insurance adoption: lessons from Mexico

Abstract

This study investigates the factors influencing the intensity of crop and livestock insurance adoption in Mexico, a country increasingly vulnerable to climate-related agricultural risks. Unlike previous studies that treat insurance uptake as a binary decision at the household level, this research analyzes adoption intensity at the state level, offering a macro-level perspective on institutional and structural dynamics. Using count data models from 2003 to 2014, we examine demographic, economic, and insurance-specific variables. Key findings reveal that population and poverty levels are positively associated with crop insurance uptake, while informal risk-sharing arrangements are negatively associated. For livestock insurance, the benefit-to-premium ratio is a significant driver. The analysis distinguishes between index-based and indemnity insurance, highlighting how product design influences adoption. These insights offer actionable guidance for policymakers to tailor insurance schemes to diverse agricultural needs, improve climate resilience, and design post-CADENA programs that better integrate formal insurance with existing safety nets.