Spatial variability in agricultural yield responses to climate change: Implications for index insurance in Burkina Faso

Index-based insurance has emerged as a compelling strategy for agricultural risk management in Africa, particularly in contexts where smallholder farmers are disproportionately exposed to climaterelated hazards. Despite its potential, the effectiveness of this mechanism is often constrained by the spatial heterogeneity of crop yield responses to climatic variables – an issue that significantly contributes to basis risk. This study investigates the value added by spatial econometric approaches, with a focus on the geographically weighted panel regression (GWPR) model, in enhancing the calibration of index-based insurance schemes under conditions of spatial instability in the relationship between maize yields and climate indicators in Burkina Faso. Drawing on panel data from eight meteorological stations spanning the period 1995 to 2009, the empirical analysis reveals a notable reduction in basis risk – estimated at 31.84% – when the GWPR model is applied. These results highlight the methodological relevance of GWPR for designing more context-sensitive and spatially adaptive insurance instruments, thereby offering a pathway toward more effective and equitable agricultural risk mitigation strategies in sub-Saharan Africa.