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Agricultural Insurances Based on Meteorological Indices: Realizations, Methods and Research Agenda

Antoine Leblois and Philippe Quirion

No 2010.71, Working Papers from Fondazione Eni Enrico Mattei

Abstract: In many low-income countries, agriculture is mostly rain-fed and yields highly depend on climatic factors. Furthermore, farmers have little access to traditional crop insurance, which suffers from high information asymmetry and transaction costs. Insurances based on meteorological indices could fill this gap since they do not face such drawbacks. However their implementation has been slow so far. In this article, we first describe the most advanced projects that have taken place in developing countries using these types of crop insurances. We then describe the methodology that has been used to design such projects, in order to choose the meteorological index, the indemnity schedule and the insurance premium. We finally draw an agenda for research in economics on this topic. In particular, more research is needed on implementation issues, on the assessment of benefits, on the way to deal with climate change, on the spatial variability of weather and on the interactions with other hedging methods.

Keywords: Agriculture; Insurance; Climatic Risk (search for similar items in EconPapers)
JEL-codes: G21 O12 Q12 Q18 Q54 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-ias
References: Add references at CitEc
Citations: View citations in EconPapers (8)

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