Fig. 1: Clustering the considered area in West Africa.

We consider the supra-national region between −19 and 10.5° longitude, and between 3 and 18.5° latitude where agriculture is profitable. The considered area covers 16 countries, i.e., Mauritania, Mali, Senegal, Gambia, Guinea Bissau, Guinea, Sierra Leone, Liberia, Ivory Coast, Burkina Fasso, Ghana, Togo, Benin, Nigeria, Niger, and Cameroon. The regions A to I represent areas with similar weather patterns, and are determined by clustering SPEI (Standardized Precipitation-Evapotranspiration Index) grid cells into nine regions⁷⁸. The regions exhibit strong correlation in weather patterns (and hence crop yield variations) within each region, and low correlation in weather patterns (and hence crop yield variations) across regions (see SI, Section 1 for more details on the definition of the regions). Here, yield distributions of different regions are assumed independent, which captures the best achievable performance under risk pooling. Given the limited amount of historical observations available, this approach allows to incorporate reasonable approximations of heterogeneity as well as spatial correlation of yields in West Africa.