This paper discusses a methodology to model precipitation indices and premium prices for index-based drought insurance for smallholders. Spatial basis risk, which is borne by the insured, is a problem, especially in variable topography. Also, site-specific drought risk needs to be estimated accurately in order to offer effective insurance cover and ensure financial sustainability of the insurance scheme. We explore farmers' perceptions on drought and spatial climate variability and draw conclusions concerning basis risk with regards to the proposed methodology.
Whereas Irish potato (Solanum tuberosum) is a major staple food in many countries, it is one of the priority value chain crops under the Rwanda’s Crop Intensification Program (CIP). The crop is more important in the northern and northwestern than other parts of Rwanda. After plantain and cassava, potato is the third most important staple cultivated by 52.9% of the households in Rwanda.