کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
4491642 | 1317869 | 2011 | 9 صفحه PDF | دانلود رایگان |
Eastern Germany is often hit by drought causing income risk for crop farmers. Index-based risk management instruments could help crop farmers to reduce their farm income risk. Such instruments have some important advantages over damage-based insurance, like e.g. less moral hazard and adverse selection. At the same time they typically have a high level of basis risk. Up to now, mainly precipitation-based weather derivatives have been discussed as an appropriate risk management instrument for farmers in Germany. As a potentially more effective alternative, we propose water capacity-based index insurance. In order to show the benefits of a precipitation-based and water capacity-based index insurance, several contract designs are compared. Using a whole farm risk program planning approach, we show that for an average agricultural producer in Eastern Germany water capacity-based index insurance offers greater benefits than precipitation-based index insurance.
► We analyze water capacity as a new underlying for index insurance for crop farmers.
► We compare the utility of water capacity- and precipitation-based insurance.
► A whole farm risk programming approach is applied on crop farms in Eastern Germany.
► Water capacity-based insurance outperform precipitation-based insurance.
► Water capacity as index combines advantages of index insurance with low basis risk.
Journal: Agricultural Systems - Volume 104, Issue 8, October 2011, Pages 645–653