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Zone-Based Group Risk Insurance

Author

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  • Wang, H. Holly

Abstract

Current country-based group crop insurance, i.e., Group Risk Plan (GRP), is not an effective risk-reducing tool in counties where natural conditions are different across the area. Using only the historical yield information, a statistical approach is developed to group farmers by their yield similarity rather than linking them based on their association with a particular county. The cases of Washington State wheat farms and Iowa corn farms are the focus of this investigation. Sub-county or cross-county zones (clusters) are identified, and each farm is classified into a cluster where individual farm identification remains unknown. To improve risk-management and cost effectiveness of the crop insurance instrument, we propose implementation of zone-based GRP as a substitute for county-based GRP, where homogeneous zones rather than county boundaries are used for indemnifying yield.

Suggested Citation

  • Wang, H. Holly, 2000. "Zone-Based Group Risk Insurance," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-21, December.
    • Handle: RePEc:ags:jlaare:30904
    DOI: 10.22004/ag.econ.30904
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    Cited by:

    1. Dobes, Leo & Chapman, Bruce, 2011. "Financing Adaptation to Climate-Induced Retreat from Coastal Inundation and Erosion," Working Papers 249536, Australian National University, Centre for Climate Economics & Policy.

    More about this item

    Keywords

    Risk and Uncertainty;

    Statistics

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