Index insurance as a tool for enhancing climate resilience and sustainability in agricultural ecosystems of Armenia

¹ The Institute of Economics after M. Kotanyan of the National Academy of Sciences of the Republic of Armenia, 15 Grigor Lusavorich Str., Yerevan 0015, Armenia
² Armenian National Agrarian University, Faculty of Agribusiness and Economics, 74 Teryan Str., Yerevan 0009, Armenia
³ Armenian State University of Economics, Chair of Theory of Economics, 128 Nalbandyan Str., Yerevan 0025, Armenia

¹ Corresponding author: vos.gohar@mail.ru

Abstract

The increasing frequency and intensity of extreme weather events due to climate change pose a significant threat to the stability and biodiversity of agricultural ecosystems. This study explores the potential of index-based insurance as a innovative financial mechanism to promote sustainable agricultural practices and enhance the climate resilience of farming systems in Armenia. The analysis employs a suite of methodologies, including comparative and statistical analyses, to assess the role of index insurance in mitigating production risks associated with biological stressors, such as droughts and floods, which directly impact crop yields, soil health, and local agro-biodiversity. The paper argues that the strategic implementation of index insurance can serve as a critical instrument for safeguarding farmers’ livelihoods, thereby encouraging the adoption of biodiversity-friendly and environmentally sustainable farming methods. As a key outcome, the establishment of a state-supported insurance entity is proposed to facilitate the development and integration of such financial tools, ensuring the long-term ecological and economic sustainability of Armenia’s agricultural landscapes.