PI
Beijing Normal University, China (Prof. Tao Ye, yetao@bnu.edu.cn), collaborate with Dr. Tadesse Woldemariam Gole, twgole@gmail.com
Abstract
Agricultural index insurance is considered as a powerful tool for smallholder producers in developing countries to transfer production risks and escape the poverty trap. However, failures to design high-quality product, to meet the urgent needs of small farmers, and to build an inclusive financial model around index insurance have limited the development of agricultural index insurance and its role in global poverty eradication. This project intends to carry out a comparative case study of coffee weather index insurance in Yunnan Province of China and Sidamo region of Ethiopia. It will identify the main driving factors of coffee yield loss, build prediction models for coffee yield loss and revenue loss, and design a series of coffee index insurance product schemes for yield protection and income protection. It will reveal the preference characteristics of coffee farmers to index insurance. It will carry out multi-criterion evaluation of the impact of products and supporting financial inclusion policies, and recommend a set of high-quality coffee index insurance scheme for pilot programs the local study areas. Through case comparison and experience summarization, the project will finally derive a paradigm for developing high-quality agricultural index insurance projects with "scientifically designed, preferred by farmers, and public-funds efficiently used". This will finally provide knowledge and experience to help more developing countries to successfully design and implement agricultural index insurance programs, and contribute to the realization of the Sustainable Development Goals of eradicating poverty and hunger globally.

Achievements
Mapping coffee farms
The project used remote-sensing imageries and machine learning technology to map coffee distributions. These maps provide essential information on the geolocations of coffee plots for insurance underwriting.
A 10m-resolution coffee distribution map of Yunnan in 2023 was generated using an object-based non-iterative clustering algorithm and deep neural network classifier, based on Sentinel-2 imagery and SRTM data. This is the first non-commercial dataset for this region. A similar map for the Ethiopian study area is currently under development.

Coffee distribution data (1km aggregated data) of the study area in Yunnan Province
Coffee yield responses to climatic stressors
The project used both controlled experiments and statistical modeling to identify critical climatic factors damaging coffee yield and develop prediction models.
Control experiments were conducted for two consecutive years in the climate chamber of Yunnan University and the Baoshan field experimental station.

The project team visiting the drought experimental site in Baoshan, Yunnan, China
The experimental results indicated that:
- Chill stress during the maturity stage irreversibly damaged the top leaves, increasing flower bud and young fruit abortion rates in the following year.

Chill stress impact in the experiment
- Moderate or severe soil drought during the flowering stage significantly reduced the numbers of coffee flowers and fruits and the yield. The net photosynthetic and transpiration rates decreased significantly as the degree of drought increased.

drought stress impact in the experiment
Coffee yield responses to key climate stressors were quantified using generalized additive models (GAMs) and random forest algorithms based on historical statistical yield and climate data, trained separately in Yunnan and Ethiopia.
The yield-climate response model trained for Yunnan showed that drought (VPD) during flowering and chill (TNn) during maturation had a significant, monotonically negative impact on coffee yield, whereas heat had no significant effect. For every 0.1kPa increase in VPD during flowering, the yield may decrease by 4%, and for every 1°C drop in TNn during maturation, the yield may decline by 19%.

Yield Response curves of coffee to different climate stressors in Yunnan, China.
A yield–climate response model was also developed for the Jimma and Sidama regions in Ethiopia.
Smallholder farmers’ preference for index-based insurance and inclusive finance models
The project uses household questionnaire surveys and discrete choice experiments together to reveal smallholder coffee farmers’ preference.
- Yunnan coffee farmers support weather index insurance, favoring low-premium, high-coverage products and income protection, with basis risk having a limited impact.
- Inclusive finance options positively affect farmers’ insurance uptake. Farmers preferred direct agricultural input subsidies, followed by premium subsidies, and least preferred preferential loan interest rates.

On-site questionnaire survey (Left: Yunnan, China; Right: Ethiopia)
Index-based insurance for Coffee Arabica (IBICA) pilot program launched in Yunnan
An index-based insurance product was designed for Yunnan based on the aforementioned yield-climate response relationship, using flowering-stage VPD and maturity-stage TNn as key indices. It provides insurance protection of up to 15,000 yuan/ha at an average premium rate of 4.5%. The product was filed by China Taiping General Insurance Co. Ltd., and approved by the Yunnan Provincial Government. A pilot program was launched in Simao, Pu'er, with the first policy covering 66.67 ha.

A signed insurance policy, underwriting statement, and coffee weather index released by the Yunnan Climate Center.
IBICA pilot program under development for Ethiopia
An IBICA product has also been preliminarily designed for the Jimma and Sidama regions of Ethiopia. Further efforts should be jointly devoted by the project team and Ethiopian local insurance partners for product design, filing, approval, and promotion campaigns, so that a pilot program could be launched for the 2025-2026 production season.

Discussing IBICA with coffee farmers in Sidama
Selected publications
Sun, H., Zhang, F., Raza, S.T., Zhu, Y., Ye, T., Rong, L., & Chen, Z*. (2023). Three decades of shade trees improve soil organic carbon pools but not methane uptake in coffee systems. Journal of Environmental Management, 347: 119166.
Yang, T., Li, Z., Bai, Y., Liu, X., & Ye, T*. (2023). Residents’ preferences for rural housing disaster insurance attributes in central and western Tibet. International Journal of Disaster Risk Science.
Du, X., Zheng, W., & Yao, Y*. (2023). The peer effect in adverse selection: Evidence from the micro health insurance market in Pakistan. Journal of Risk and Insurance, 90: 1063-1100.
Zhu, Y., Liu, Y., Chen, Z., Li, M., Fan, L*., Zhang, M*. (2024). Assessing the climate change impacts on Coffee arabica cultivation regions in China. Theoretical and Applied Climatology.
Liu J., Wang, Y., & Yao, Y*. (2024). Anticipated benefit termination and health care consumption responses: Evidence from a quasi-experiment. Journal of Economic Behavior and Organization.
Dong X., Gao J., Jiang M., Tao Y., Chen X., Yang X., Wang L., Jiang D., Xiao Z., Bai X., He F*. (2024). The Identification and Characterization of WOX Family Genes in Coffea arabica Reveals Their Potential Roles in Somatic Embryogenesis and the Cold-Stress Response. International journal of molecular sciences, 25(23):13031.
Wang, X., Ye, T*., Fan, L., Liu, X., Zhang, M., Zhu, Y., Gole, T.W. (2025). Chill topped historical Arabica coffee yield loss among climate stressors in Yunnan, China, followed by drought. npj Natural Hazards, 2, 32.
Ye, T., Liu, X. Disaster Insurance. Beijing: Beijing Normal University Press, 2024.