Agricultural I nsurance and I ntensification I nvestment: C ase S tudy of Khorasan Razavi P rovince

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 .