Managing Economic Risk from Invasive Species: Bug Options

Valerie Fournier, Mark Manfredo, Timothy Richards and James Eaves

No 19553, 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Invasive insect species cause billions of dollars of direct and indirect damage to U.S. crops each year. The market for insuring insect damage is, however, far from complete. The objective of this study is to design and value insect derivatives, or "bug options," which would offer growers a market-based means for transferring risk of pest damage to speculators or others who may profit from higher insect populations. A bug option valuation model is developed and applied to Bemesia tabaci infestation in cotton. The results show that insect derivatives may become important risk management tools for a wide range of growers.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 24
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea05:19553

DOI: 10.22004/ag.econ.19553

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