ZONE-BASED GROUP RISK INSURANCE

H. Holly Wang

Journal of Agricultural and Resource Economics, 2000, vol. 25, issue 2, 21

Abstract: Current country-based group crop insurance, i.e., Group Risk Plan (GRP), is not an effective risk-reducing tool in counties where natural conditions are different across the area. Using only the historical yield information, a statistical approach is developed to group farmers by their yield similarity rather than linking them based on their association with a particular county. The cases of Washington State wheat farms and Iowa corn farms are the focus of this investigation. Sub-county or cross-county zones (clusters) are identified, and each farm is classified into a cluster where individual farm identification remains unknown. To improve risk-management and cost effectiveness of the crop insurance instrument, we propose implementation of zone-based GRP as a substitute for county-based GRP, where homogeneous zones rather than county boundaries are used for indemnifying yield.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:30904

DOI: 10.22004/ag.econ.30904

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