Farmers and Pixels: Toward Sustainable Agricultural Finance with Space Technology

Sommarat Chantarat, Preesan Rakwatin and Chutatong Charumilind

No 75, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: This paper explores promises of satellite technology in creating high-quality agricultural risk information necessary for unlocking market inefficiencies that have precluded sustainable development of insurance markets and overall risk management in agricultural sector, where uninsured risk remains a leading impediment of economic development. Using pixel-level, high resolution, high frequency and longitudinal satellite data together with a combination of geographical information system (GIS) data, administrative and household-level agricultural data, this paper answers three questions: (1) Can satellite data be used to generate high-quality risk information for Thai rice farmers? (2) How might the satellite-based risk information be used to crowd in sustainable markets for agricultural finance? And (3) What are potential economic impacts of having high quality agricultural data on farmers, agricultural banks and government? After illuminating the potential values of investing in high-quality agricultural data, this paper also discusses key challenges and ways forward in bringing this research into real action to enhance financial stability of farmers, financial system and government.

Keywords: Satellite technology; Agricultural Risk; Agricultural Insurance; Risk-contingent Credit; Rice Production; Thailand (search for similar items in EconPapers)
JEL-codes: D81 G22 Q12 Q14 Q18 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2017-10
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Citations: View citations in EconPapers (3)

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