Leveraging optimal portfolio of Drought-Tolerant Maize Varieties for weather index insurance and food security
Sebastain Awondo () and
Genti Kostandini ()
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Genti Kostandini: University of Georgia
The Geneva Risk and Insurance Review, 2022, vol. 47, issue 1, No 4, 45-65
Abstract We investigate the impact of optimizing a portfolio of Drought-Tolerant Maize Varieties (DTMVs) to manage weather risk and its implications on the development of sustainable micro-insurance markets. We use high-resolution climate data and on-farm trial data, involving 20 DTMVs, over 49 locations spanning eight countries in Africa and 5 mega-environments. Markov chain and multivariate spatial Bayes models are employed to generate multivariate space-time rainfall and maize yield distributions, and derive optimal semi-variance portfolio of DTMVs. We find that optimal portfolios significantly outperformed naive portfolios, overall, reducing insurance premium rates by 31–55%.
Keywords: Weather risk; Drought-tolerant maize; Portfolio optimization; Downside risk measures; Index insurance; Africa (search for similar items in EconPapers)
JEL-codes: D80 Q12 (search for similar items in EconPapers)
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