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

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Author Info

  • Birgit Müller

    ()
    (Department of Ecological Modelling, UFZ, Helmholtz Centre for Environmental Research - UFZ, Leipzig, Germany)

  • Martin Quaas

    (Department of Economics, University of Kiel, Germany)

  • Karin Frank

    (Department of Ecological Modelling, UFZ, Helmholtz Centre for Environmental Research - UFZ, Leipzig, Germany)

  • Stefan Baumgärtner

    (Department of Sustainability Sciences, Leuphana University of Lüneburg, Germany)

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.

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Bibliographic Info

Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 149.

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Length: 27 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:lue:wpaper:149

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Web page: http://leuphana.de/institute/ivwl.html

Related research

Keywords: ecological-economic modeling; weather-index insurance; Namibia; grazing management; risk; sustainability; weather-based derivatives;

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Cited by:
  1. repec:hal:wpaper:hal-00796528 is not listed on IDEAS
  2. Antoine Leblois & Philippe Quirion & Benjamin Sultan, 2014. "Price vs. weather shock hedging for cash crops: ex ante evaluation for cotton producers in Cameroon," Post-Print halshs-00967313, HAL.
  3. Sherren, Kate & Fischer, Joern & Fazey, Ioan, 2012. "Managing the grazing landscape: Insights for agricultural adaptation from a mid-drought photo-elicitation study in the Australian sheep-wheat belt," Agricultural Systems, Elsevier, vol. 106(1), pages 72-83.
  4. repec:hal:ciredw:hal-00796528 is not listed on IDEAS

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