Avaluating Alternative Risk Transfer as a Crop Insurance Policy under Stochastic Yields and Prices

Frikkie Mare, Bennie Grove and Barend Willemse

No 212227, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: The purpose is to evaluate Alternative Risk Transfer (ART) against Short-term Crop Hail Insurance (SCHI) to provide cost effective and constant cover against hail risk under stochastic yields and prices. A farm financial simulation model was developed to simulate the influence of hail damage and the different crop insurance policies on a maize farm with variable levels of yields and prices. The yield and price data were simulated with the procedure for estimating and simulating multivariate empirical (MVE) probability distributions. The risk efficiency was analysed with stochastic efficiency with respect to a function (SERF). The insurance options with the largest net benefit to the enterprise were ART in the low hail risk area and SCHI in the high hail risk area. It was found that both SCHI and ART might be effective measures for the mitigation of hail damage, depending on the amount of hail risk present in certain area.

Keywords: Crop Production/Industries; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 29
Date: 2015
New Economics Papers: this item is included in nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/212227/files/M ... and%20Prices-186.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:212227

DOI: 10.22004/ag.econ.212227

Access Statistics for this paper

More papers in 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().