Weather Derivatives and Water Management in Developing Countries: An Application for an Irrigation District in Central Mexico
Leonardo Sanchez-Aragon () and
Journal of Agricultural and Resource Economics, 2017, vol. 42, issue 2
This paper analyzes possible improvements to water allocation from introducing weather derivatives as an insurance instrument in irrigation districts with no water markets and two cropping seasons. Dry-season production depends completely on irrigation, while wet-season production depends on irrigation as a supplement to naturally occurring precipitation. Using an analytical model of water allocation and historical data from an irrigation district in Central Mexico, simulations show that weather derivatives could encourage interseasonal reallocation of water from wet to dry season, generating new Pareto-optimal water allocations that improve overall welfare among producers.
Keywords: Agricultural and Food Policy; Crop Production/Industries; Risk and Uncertainty (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://ageconsearch.umn.edu/record/257995/files/JA ... Torres%2C146-163.pdf (application/pdf)
Working Paper: Effectiveness of weather derivatives as a cross-hedging instrument against climate change: Case studies of reservoir water allocation management in Guanajuato, Mexico (2013)
Working Paper: Effectiveness of Weather Derivatives as Cross-Hedging Instrument against Climate Change: The Cases of Reservoir Water Allocation Management in Guanajuato, Mexico (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:257995
Access Statistics for this article
More articles in Journal of Agricultural and Resource Economics from Western Agricultural Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().