Crop insurance as farmers adaptation for climate change risk on agriculture in Surakarta residency-Indonesia

Suryanto, Evi Gravitiani, Akhmad Daerobi and Fitri Susilowati

International Journal of Trade and Global Markets, 2020, vol. 13, issue 2, 251-266

Abstract: This paper aims to examine variables that influence willingness to adaptation, besides to estimate production loss due to climate change. Specific goals can be split into three parts: the first step was to do mapping by geographic information systems (GIS). The second step was to assess economic losses by using production loss tools. Finally, the last step was identify the factors that affect farmers' decisions to adapt the climate changes risk. The research method used was a quantitative method by surveying areas classified as vulnerable to crop failure. There were 380 householders involved in this research. The approach used was the contingent valuation method (CVM). The results indicated that 128,154 hectares of agricultural land were vulnerable to natural disasters; whereas 41,704 hectares were vulnerable to drought. The estimated loss in these areas was more than 207 billion IDR, derived from the vulnerable agricultural land area to flooding or drought, and then multiplied by the potential loss of production. One policy to overcome injuries included crop insurance. However, the results revealed that 93% of respondents were not willing to pay premium of crop insurance. The willingness to pay for premium rate was less than 50,000 IDR per harvest period. It implies that the implementation of crop insurance in Indonesia still requires government subsidies.

Keywords: climate change; adaptation; crop insurance; willingness to pay; WTP; vulnerability; risk management; flood; drought; farmer. (search for similar items in EconPapers)
Date: 2020
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