The Value of Long-Term Climate Forecast Information in Weather Index Insurance

Denis A. Nadolnyak and Dmitry Vedenov

No 61755, 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado from Agricultural and Applied Economics Association

Abstract: In the paper, preliminary results of the analysis of potential use of climate forecast information in designing rainfall index insurance in the southeastern region of the U.S. are reported. Joint distributions of bi-monthly rainfall and El Nino Southern Oscillation (ENSO) indexes are estimated using copula analysis of historical data. The risk reducing effectiveness of introducing premiums conditional on ENSO forecast is evaluated. The results indicate some dependence of the downward volatility of rainfall on the lagged ENSO (forecast) index, particularly in the coastal areas and in the late winter and spring.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 17
Date: 2010-07
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea10:61755

DOI: 10.22004/ag.econ.61755

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