Spatial and Temporal On-Farm Risk Management - Crop Production Scheduling and Index Insurance Strategies
AbstractAn agronomic crop growth model, Decision Support System for Agro-Technology Transfer (DSSAT), is used to find optimal crop management strategies for cotton production in Mitchell, Miller, and Lee Counties in Georgia during the past 10 years. Planting date and irrigation threshold are the two variables optimized to maximize farmer's expected utility. A decreasing absolute risk aversion - constant relative risk aversion (DARA-CRRA) utility function is used to examine crop management decision that can be influenced by changes in inter-temporal risk behavior. Comparison is made from management perspective - one is dynamic crop management strategy that varies each year; one is static (constant) strategy over 10 years. Based on the best crop management strategies, index insurance products are designed to help farmers further reduce production risk. The impact of geographical basis risk was assessed by comparing the risk reduction generated from index insurance contracts based on different weather stations; the impact of temporal basis risk is assessed by allowing separate contracts to be purchased for different sub-periods during the entire period.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49350.
Date of creation: 2009
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Irrigation; Planting Date; Risk Management; Weather Derivative Contract; Basis Risk; Agribusiness; Agricultural Finance; Crop Production/Industries; Farm Management; Financial Economics; Risk and Uncertainty;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2009-05-16 (Agricultural Economics)
- NEP-ALL-2009-05-16 (All new papers)
- NEP-IAS-2009-05-16 (Insurance Economics)
- NEP-RMG-2009-05-16 (Risk Management)
- NEP-UPT-2009-05-16 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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