Rice producers in Battambang, Cambodia, are facing increasingly significant weather-related risks, such as drought and flooding, that negatively impact rice yield. They currently utilize minimal adaptation strategies to manage these risks. In this context, index insurance arises as an innovative risk management tool that has the potential to promote resilience and improve producers’ livelihoods. 

Index insurance is an alternative form of traditional crop insurance where crop loss verification is not required. Instead, this tool utilizes an indicator of losses, such as yield, rainfall, or vegetation measurement, as an index to trigger payouts. For example, if a threshold was set for 500 mm of rainfall in one season, and the insured field received 550 mm of rainfall, the producer would receive a payout. Rainfall can be measured at local weather stations or through satellite systems such as CHIRPS. 

By requiring few personnel, reducing the number of on-farm verifications, and by having real-time data, index insurance has been promoted as a low-cost and time-efficient risk management tool, specifically for smallholder producers. However, index insurance faces the challenge of basis risk, or the risk that producers’ actual losses do not correlate well with the indexed measurements, resulting in the potential for producers to be worse off as a result of purchasing the insurance.

Due to these opportunities and challenges, I chose to conduct my research on index insurance. My target location was the Battambang Province of Cambodia, as I had previous connections with staff at the Center of Excellence on Sustainable Agricultural Intensification and Nutrition (CE SAIN). They work in an extension-type role with rice producers across rural areas of Cambodia. 

I completed 8 weeks of data collection and in-country field work in June 2023. I sought to investigate various research questions on the riskiness of rice production, how those risks can be characterized, and on producers’ current perceptions of index insurance. 

Prior to answering these questions, I wanted to ensure my colleagues at CE SAIN had a strong understanding and background on index insurance concepts. To do so, I conducted three “knowledge transfer sessions” with my enumerators. This prepared them well for the Yield Recall Survey that we conducted with 192 rice producers in Battambang. This took us 5 intense days of time together, but it was a rewarding process. We got to learn side-by-side how to collect robust and valid data, while also bonding and having fun. Each time I got back on our van, the students had a new fresh fruit for me to try! 

Once the on-farm surveys were completed, we conducted four Focus Group Discussions (FGDs). These provided us with more qualitative data on rice producers’ perceptions, interests, and goals. I also collected information on the landscape of index insurance in Cambodia through 11 key stakeholder interviews. I met with government officials, NGOs, research institutes, and development programs to learn more about their investments in index insurance. This served as a needed complement to my quantitative and farmer-focused data, as it is important not to repeat efforts that have already taken place. 

Now that I’m back from the summer, I am analyzing the Yield Recall Survey data in R. This yield data will be combined with CHIRPS rainfall data for my target communes to determine if a high-quality index with low basis risk could be created for these areas. I am also working on translating and transcribing the FGD recordings to learn more from the words of smallholder farmers.

Throughout the summer, I learned many valuable lessons, but perhaps the most valuable one centered around trust. The trust I was able to build with CE SAIN was mainly due to my relationship with them. In my previous job, I had met the leaders of CE SAIN and shown them that I valued their knowledge and expertise, yet I had something to share with them that could improve their country as well. Building off that existing relationship was essential throughout my summer. By approaching my research as a two-way street (one where we could learn from each other), we were able to trust that each other had valuable skills and knowledge to contribute to the project. Through knowledge transfer sessions, I was able to further build the trust of other donor-funded projects, building my own credibility, but also learning from their vast experience in this region.  

Finally, I learned about how much the success of crop insurance relies on trust throughout the entire circle of stakeholders. Government entities must trust that private sector insurers will utilize funding in appropriate ways that benefit smallholder farmers. Private insurers must trust that their own accountants and product designers are developing high-quality products with low basis risk. Farmers must trust that private insurers have their best interest in mind, and they will receive a payout when they deserve one. If any link in this cycle is broken, an index insurance product is likely not to be sustainable.