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A GIS-based model for multiscale forest insurance analysis: The Italian case study

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  • Sacchelli, Sandro
  • Cipollaro, Maria
  • Fabbrizzi, Sara

Abstract

The increasing probability of natural and human-induced extreme events in forests calls for innovative forms of risk management. Insuring timber is one possible way to cope with possible financial damages incurred by forest owners. This study developed a Geographic Information System (GIS) for identifying optimal insurance schemes in the forestry sector. The model comprises three modules used to calculate: i) potential financial damage (temporary or permanent), ii) the annual probability of extreme events (fires and storms), iii) the insurance premium for each site. Research focused on a multiscale approach able to provide outputs at a regional (NUTS-2) and national scale in Italy. Results reveal the high variability of forests in the case study area from the standpoint of both the value of woodlands and the probability of extreme meteorological events. In general, premiums seem to be consistent in the southern regions, in high forest and in Mediterranean forest typologies. The model can be used to analyse different scenarios and variables related to forest characteristics/management as well as financial options. Additional analysis can reveal where and how public subsidy of insurance premiums could favour the diffusion of this form of risk management.

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  • Sacchelli, Sandro & Cipollaro, Maria & Fabbrizzi, Sara, 2018. "A GIS-based model for multiscale forest insurance analysis: The Italian case study," Forest Policy and Economics, Elsevier, vol. 92(C), pages 106-118.
    • Handle: RePEc:eee:forpol:v:92:y:2018:i:c:p:106-118
    DOI: 10.1016/j.forpol.2018.04.011
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    References listed on IDEAS

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    1. Dai, Yongwu & Chang, Hung-Hao & Liu, Weiping, 2015. "Do forest producers benefit from the forest disaster insurance program? Empirical evidence in Fujian Province of China," Forest Policy and Economics, Elsevier, vol. 50(C), pages 127-133.
    2. Li, Jiangcheng & Zhang, Chunmin & Liu, Jifa & Li, Zhen & Yang, Xuan, 2018. "An application of Mean Escape Time and metapopulation on forestry catastrophe insurance," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 495(C), pages 312-323.
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    4. Brunette, M. & Holecy, J. & Sedliak, M. & Tucek, J. & Hanewinkel, M., 2015. "An actuarial model of forest insurance against multiple natural hazards in fir (Abies Alba Mill.) stands in Slovakia," Forest Policy and Economics, Elsevier, vol. 55(C), pages 46-57.
    5. Mart-Jan Schelhaas & Geerten Hengeveld & Marco Moriondo & Gert Reinds & Zbigniew Kundzewicz & Herbert Maat & Marco Bindi, 2010. "Assessing risk and adaptation options to fires and windstorms in European forestry," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 15(7), pages 681-701, October.
    6. Shepard, H. B., 1937. "Forest Fire Insurance in the Pacific Coast States," Technical Bulletins 165664, United States Department of Agriculture, Economic Research Service.
    7. Schoene, Dieter H.F. & Bernier, Pierre Y., 2012. "Adapting forestry and forests to climate change: A challenge to change the paradigm," Forest Policy and Economics, Elsevier, vol. 24(C), pages 12-19.
    8. Brunette, Marielle & Couture, Stéphane, 2008. "Public compensation for windstorm damage reduces incentives for risk management investments," Forest Policy and Economics, Elsevier, vol. 10(7-8), pages 491-499, October.
    9. Barreal, Jesús & Loureiro, Maria L. & Picos, Juan, 2014. "On insurance as a tool for securing forest restoration after wildfires," Forest Policy and Economics, Elsevier, vol. 42(C), pages 15-23.
    10. Deng, Yiling & Munn, Ian A. & Coble, Keith & Yao, Haibo, 2015. "Willingness To Pay For Potential Standing Timber Insurance," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 47(4), pages 510-538, November.
    11. Sauter, Philipp A. & Möllmann, Torsten B. & Anastassiadis, Friederike & Mußhoff, Oliver & Möhring, Bernhard, 2016. "To insure or not to insure? Analysis of foresters' willingness-to-pay for fire and storm insurance," Forest Policy and Economics, Elsevier, vol. 73(C), pages 78-89.
    12. Qin, Tao & Gu, Xuesong & Tian, Zhiwei & Pan, Huanxue & Deng, Jing & Wan, Li, 2016. "An empirical analysis of the factors influencing farmer demand for forest insurance: Based on surveys from Lin’an County in Zhejiang Province of China," Journal of Forest Economics, Elsevier, vol. 24(C), pages 37-51.
    13. Holecy, Jan & Hanewinkel, Marc, 2006. "A forest management risk insurance model and its application to coniferous stands in southwest Germany," Forest Policy and Economics, Elsevier, vol. 8(2), pages 161-174, March.
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    Cited by:

    1. Patrice Loisel & Marielle Brunette & Stéphane Couture, 2020. "Insurance and Forest Rotation Decisions Under Storm Risk," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(2), pages 347-367, July.
    2. Feng, Xin & Dai, Yongwu, 2019. "An innovative type of forest insurance in China based on the robust approach," Forest Policy and Economics, Elsevier, vol. 104(C), pages 23-32.
    3. Yiling Deng & Ian A. Munn & Haibo Yao, 2021. "Attributes‐based conjoint analysis of landowner preferences for standing timber insurance," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 24(4), pages 421-444, December.
    4. Marielle Brunette & Marc Hanewinkel, 2021. "Assurance financière et assurance naturelle : une application à la forêt," Working Papers of BETA 2021-28, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    5. Bastit, Félix & Brunette, Marielle & Montagné-Huck, Claire, 2023. "Pests, wind and fire: A multi-hazard risk review for natural disturbances in forests," Ecological Economics, Elsevier, vol. 205(C).
    6. Cipollaro, Maria & Sacchelli, Sandro, 2018. "Demand and potential subsidy level for forest insurance market in Demand and potential subsidy level for forest insurance market in Italy," 2018 Seventh AIEAA Conference, June 14-15, Conegliano, Italy 275647, Italian Association of Agricultural and Applied Economics (AIEAA).
    7. Félix Bastit & Marielle Brunette & Claire Montagne-Huck, 2021. "Earth, wind and fire: A multi-hazard risk review for natural disturbances in forests," Working Papers of BETA 2021-25, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    8. Grilli, Gianluca & Fratini, Roberto & Marone, Enrico & Sacchelli, Sandro, 2020. "A spatial-based tool for the analysis of payments for forest ecosystem services related to hydrogeological protection," Forest Policy and Economics, Elsevier, vol. 111(C).
    9. Sandro Sacchelli & Costanza Borghi & Gianluca Grilli, 2021. "Prevention of erosion in mountain basins: A spatial-based tool to support payments for forest ecosystem services," Journal of Forest Science, Czech Academy of Agricultural Sciences, vol. 67(6), pages 258-271.

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