The following thesis aims to assess the weather risks that affect the growing of the basic grains in Honduras in order to finally propose an index insurance contract that would help small income farmers improve their quality of life by bringing them more opportunities, like access to credit. Following a thorough literature review that describes Honduras’s basic economic and social data, agricultural sector of the country, natural disaster effects, and the overall problematic surrounding the topic; weather index insurance is described and many examples of its application in different countries are given in order to find a structure suitable for the case of Honduras. To determine what risks affect the production for each agricultural cycle, region, and basic grain in Honduras; a correlation analysis was done with the production and rainfall data available. Also, the rainfall time series for each region of the country was analyzed to understand its behavior and to aid in the construction of the proposed contracts. Finally, the results and conclusions are presented; where problems with the data availability limited the statistical significance of the risk assessment but nonetheless open the door for many future studies related to this topic.

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