Farmers' risk perceptions, attitudes and management strategies, and willingness to pay for crop insurance in Nepal

We analysed Nepalese farmers' risk perceptions, attitudes, management strategies and preferences for crop insurance products. We found that drought is the most important weather-related risk, followed by flood. The farmers' risk management decisions are influenced more by risk attitude than risk perception. Their willingness to pay for crop insurance increases with risk coverage level and risk-aversion, while it decreases with the level of deductible. The farmers are indifferent between insurance product types for the same risk coverage level. The demand-supply mismatch in the crop insurance market is partly due to farmers' willingness to pay being lower than the existing premium.