Weather Index Insurance and Input Intensification: Evidence from Smallholder Farmers in Kenya

Climate variability discourages smallholders from adopting yield-enhancing inputs, perpetuating low agricultural productivity. Weather Index Insurance (WII) could mitigate this, but empirical evidence remains inconsistent, with most insights drawn from controlled experiments lacking real-world scalability. Using observational data from Kenyan smallholders across diverse agroecological zones, this study employs instrumental variable regression to assess WII's influence on agricultural input adoption and use intensity. Results demonstrate that WII significantly increases adoption and intensification of improved inputs but displaces traditional practices, with effects mediated by gender, financial access, and infrastructure. However, WII's efficacy diminishes under extreme drought and in high-fertility soils, revealing threshold-dependent climate resilience shaped by local agroecological conditions. Our results demonstrate that WII's productivity benefits are context-dependent, urging policies that combine insurance with agroecological targeting and complementary interventions like credit access to achieve sustainable agricultural transformation.