Climate and agricultural risk: measuring the effect of ENSO on U.S. crop insurance
Jesse Tack () and
David Ubilava ()
Agricultural Economics, 2015, vol. 46, issue 2, 245-257
Predictive models of climatic phenomena can aid in insurance program design and decision making. Extreme weather outcomes have been linked to the El Niño Southern Oscillation (ENSO), which globally impacts agricultural production. This study demonstrates that extreme ENSO events alter cotton yield distributions in the Southeastern United States. These impacts translate into economically meaningful effects on crop insurance premium rates. Commercial insurers can use publicly available information to determine if government-set premium rates are mispriced, and in turn extract economic rents via the federally mandated Standard Reinsurance Agreement. By ceding underpriced policies in El Niño and La Niña years, we find that private insurance companies can reduce paid indemnities by 10–15% on average.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
Working Paper: El Ni˜no Southern Oscillation Impacts on Crop Insurance (2013)
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:bla:agecon:v:46:y:2015:i:2:p:245-257
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0169-5150
Access Statistics for this article
Agricultural Economics is currently edited by W.A. Masters and G.E. Shively
More articles in Agricultural Economics from International Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().