Research on World Agricultural Economy

Perceived Risks and the Demand for Index-Based Insurance: Evidence from Shrimp Farmers in the Mekong Delta

Vo Hong Tu

Department of Rural Socio‑Economics, College of Rural Development, Can Tho University, Can Tho 94000, Vietnam

Nguyen Thuy Trang

Department of Rural Socio-Economics, College of Rural Development, Can Tho University, Can Tho 94000, Vietnam

 

DOI: https://doi.org/10.36956/rwae.v7i1.2425

Received: 6 July 2025 | Revised: 21 August 2025 | Accepted: 2 September 2025 | Published Online: 13 January 2026

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Abstract

This study investigates the demand for index-based insurance among shrimp farmers in the Mekong Delta, a region increasingly vulnerable to climate-related risks and environmental uncertainties. The study aims to identify the major factors influencing farmers’ willingness to adopt such insurance schemes and how these preferences are shaped by both economic and ecological conditions. Drawing on survey data collected from 500 shrimp farmers, the study employs a multinomial logit regression model to analyze the complex interplay between perceived risks, socio-demographic characteristics, and the likelihood of purchasing insurance products. The findings reveal that water pollution, climate variability, and frequent disease outbreaks remain the most pressing concerns for shrimp farmers. Interestingly, semi-intensive farmers, particularly those without plastic-lined ponds, exhibit a stronger inclination toward purchasing insurance. However, paradoxically, farmers facing higher levels of production risks tend to be more reluctant, largely due to distrust in compensation mechanisms, limited understanding of insurance operations, and negative past experiences with support programs. By contrast, when farmers perceive greater environmental, market, and financial risks, their willingness to engage with index-based insurance increases significantly. Overall, the study underscores the importance of designing tailored insurance products linked to market and environmental indices. Such approaches would not only enhance adoption rates but also strengthen the resilience and long-term sustainability of shrimp farming communities in the Mekong Delta.

Keywords: Adoption; Insurance Demand; Index-based Insurance; Shrimp Farming; Risk Management

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