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Pitfalls and potential of institutional change: Rain-index insurance and the sustainability of rangeland management

Birgit Müller (), Martin Quaas, Karin Frank and Stefan Baumgärtner
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Birgit Müller: Department of Ecological Modelling, UFZ, Helmholtz Centre for Environmental Research - UFZ, Leipzig, Germany
Karin Frank: Department of Ecological Modelling, UFZ, Helmholtz Centre for Environmental Research - UFZ, Leipzig, Germany

No 149, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: Rain-index insurance is strongly advocated in many parts of the developing world to help farmers to cope with climatic risk that prevail in (semi-)arid rangelands due to low and highly uncertain rainfall. We present a modeling analysis of how the availability of rain-index insurance affects the sustainability of rangeland management. We show that a rain-index insurance with frequent payo s, i.e. a high strike level, leads to the choice of less sustainable grazing management than without insurance available. However, a rain-index insurance with a low to medium strike level enhances the farmer's well-being while not impairing the sustainability of rangeland management.

Keywords: ecological-economic modeling; weather-index insurance; Namibia; grazing management; risk; sustainability; weather-based derivatives (search for similar items in EconPapers)
JEL-codes: D81 G22 Q14 Q56 Q57 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009-10
New Economics Papers: this item is included in nep-agr, nep-env and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Pitfalls and potential of institutional change: Rain-index insurance and the sustainability of rangeland management (2011) Downloads
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