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Weather Risk and the Viability of Weather Insurance In Western China

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  • Turvey, Calum G.
  • Kong, Rong
  • Belltawn, Burgen
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    Abstract

    This paper presents preliminary results on the possible demand for weather insurance in China. Results from 1,564 farm households from Western and Central China between October 2007 and October 2008 suggest that the greater risk for farmers is drought followed by excessive rain. Heat is less critical as a risk but more significant than cool weather. Results suggest a strong interest in precipitation insurance with 50% and 44% of respondents indicating strong interest in the product. Supplementary results indicate that interest is equal between planting, cultivating, and harvesting. Furthermore results suggest that farmers are willing to adopt new ideas, and where possible already take action to self insure through diversification and other means, The results are encouraging. Examples and discussion of how weather insurance can be implemented is included in the text.

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    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49362.

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    Date of creation: 30 Apr 2009
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    Handle: RePEc:ags:aaea09:49362

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    Related research

    Keywords: weather insurance; rainfall insurance; China; Agricultural and Food Policy; Agricultural Finance; International Development; Risk and Uncertainty;

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    1. Oliver Musshoff & Norbert Hirschauer & Martin Odening, 2008. "Portfolio effects and the willingness to pay for weather insurances," Agricultural Finance Review, Emerald Group Publishing, vol. 68(1), pages 83-97, September.
    2. T.J. Richards & J. Eaves & M. Manfredo & S.E. Naranjo & C.-C. Chu & T.J. Henneberry, 2008. "Spatial-Temporal Model of Insect Growth, Diffusion and Derivative Pricing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 962-978.
    3. Martin Odening & Oliver Musshoff & Wei Xu, 2007. "Analysis of rainfall derivatives using daily precipitation models: opportunities and pitfalls," Agricultural Finance Review, Emerald Group Publishing, vol. 67(1), pages 135-156, May.
    4. Skees, Jerry R., 2008. "Innovations in Index Insurance for the Poor in Lower Income Countries," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(1), April.
    5. Timothy J. Richards & James Eaves & Valerie Fournier & S.E. Naranjo & C.-C. Chu & T.J. Henneberry, 2006. "Managing economic risk caused by insects: bug options," Agricultural Finance Review, Emerald Group Publishing, vol. 66(1), pages 27-45, May.
    6. Richards, Timothy J. & Manfredo, Mark R. & Sanders, Dwight R., 2004. "Pricing Weather Derivatives," Working Papers 28536, Arizona State University, Morrison School of Agribusiness and Resource Management.
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    Cited by:
    1. Linging Hou & Dana L.K. Hoag & Yueying Mu, 2011. "Testing for adverse selection of crop insurance in northern China," China Agricultural Economic Review, Emerald Group Publishing, vol. 3(4), pages 462-475, November.

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