Does the Mutton Sheep Weather Index Insurance Promote the Mutton Sheep Industry?A Study based on the Endogenous Switching Regression Model

Abstract

In 2018, as the first livestock weather index-based insurance product for grassland animal husbandry, the mutton sheep weather index insurance was officially listed as a subsidy agricultural insurance by the Government of the Inner Mongolia Autonomous Region, which was later in 2019 implemented throughout the XilinGol League of the autonomous region. Employing the endogenous switching regression model, this study investigates the factors influencing herdsmen's purchasing decisions, as well as the impact of mutton sheep weather index insurance on the mutton sheep industry scale, which are accomplished based on 308 survey data from herdsmen in the XilinGol League. The empirical results reveal that the age, age squared, pasture area and neighbors' purchasing intention constitute the significant influencing factors of the herdsmen's purchasing decisions, while the pasture area and net pastoral income affect the scale of mutton sheep farming prominently. Furthermore, according to the ATT results, the mutton sheep weather index insurance produces an insignificant impact on the sheep farming scale of herdsmen. The conclusions of this study suggest that the mutton sheep weather index insurance is not contrary to the cattle-increasing, sheep-reducing policy in the Inner Mongolia Autonomous Region, which also provide a solid theoretical basis for the promotion of the insurance throughout the autonomous region.