Abstract:
Theoretically and empirically
,
it has been often argued that production uncertainty
affects
the farmers
’ production
efficien
cy
. Insurance can play an impactful role in
reducing the uncertainty and
,
consequently
,
increasing the investment. Using multilevel
models, we examine
d
the effect of agricultural insurance programs on investment in the
agricultural sector of Khorasan Razavi
P
rovince. The cross sectional data
was
collected
by using the two
-
stage cluster sampling method in 2012
-
20
13
.
The results indicate
d
that
the insurance background, insured cultivation area, compensation payments, and all of
the socio
-
economic variables
as well as the
count
y
and climatic situation
s affected
the
farmers' willingness to invest. Hence, insurance policies should be
based
on
climatic
conditions
and particularized for the local situations of the specific counties. In addition,
the payments
of the
compensation should be on time to encourage the investments.
Keywords
:
C
ompensation payments
,
I
ndemnity payments
,
M
ultilevel model
,
P
roduction
uncertainty
.
