Leveraging Crop Insurance to Improve Climate Resilience

Climate change is making life increasingly precarious for the hundreds of millions of households across low- and middle-income countries whose livelihoods depend on natural cycles. Few places illustrate this more starkly than Odisha, India, where three decades of data show a marked rise in extreme rainfall, more frequent cyclones, and a monsoon season that has compressed from a historical norm of 120 days of rain to just 60–70 days. For the state’s farming families, this volatility is not an abstraction: a single bad season can wipe out income, deplete savings, and push households toward debt or food insecurity.

Crop insurance is one of the most promising tools governments have for helping farmers absorb these shocks. India’s Pradhan Mantri Fasal Bima Yojana (PMFBY) is among the largest such programs in the world, enrolling roughly 40 million people annually and, in Odisha, subsidized to the point of being nearly free to join. Yet seven years after its rollout, enrollment in the extensive coverage remains stubbornly low. Our research team is working to understand why—and to test low-cost, scalable ways to close that gap.

Though PMFBY offers highly subsidized crop insurance, many farmers in Odisha don’t know they are covered, receive information on the program late into the planting cycle, and face difficult enrollment requirements, all of which may heighten skepticism in the policy. In partnership with J-PAL South Asia and the Government of Odisha, our team is conducting a randomized trial across 232 villages to test whether a simple, low-cost awareness intervention may boost program participation. 

The study is part of a larger effort to understand how rural households cope with climate shocks and is the foundation of an expanding collaboration to generate evidence the government can act on directly: how long to sustain the current subsidy, when in the agricultural calendar to announce policy details, whether complementary interventions should be built into the program, how to design emergency relief for farmers who lack coverage, and how PMFBY interacts with other state initiatives such as weather forecasting and agricultural advisory services.