Modelling decision making under risks : the case of smallholder farmers in Northern Ghana

Smallholder farmers in semi-arid West Africa face low soil fertility, weak market access, and high weather variability, making farm investments risky and leading to poverty traps. This study applied an integrated bio-economic model to assess risk management options for smallholders in Northern Ghana. The model combines crop simulation, farm optimisation, driven by a large ensemble climate data to evaluate the impacts of index-based insurance. Results show that seed insurance with replanting incentives stabilises incomes and reduces asset losses more effectively than full-weather insurance options. However, basis risk, driven by environmental mismatches can reduce insurance effectiveness. Findings highlight the importance of context-specific risk management strategies combining risk reduction, transfer, and adaptive planning to support sustainable intensification and resilience under climate variability.