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.