IDEAS home Printed from https://ideas.repec.org/a/wly/apecpp/v48y2026i4p1119-1134.html

Coping With Production Risk: Effects of Sown Plant Diversity on the Attractiveness of Crop Insurance in Grasslands

Author

Listed:
  • Nicolas Alou
  • Sergei Schaub
  • Martin Quaas
  • Robert Finger

Abstract

Increased frequency of extreme weather events, particularly droughts, threatens grassland farming by destabilizing yields and farms' economic viability. We examine, theoretically and through numerical simulations, how sown plant diversity (natural insurance) influences the attractiveness of indemnity and drought index insurance (formal insurance) in grassland systems across Europe. Our analysis shows that higher sown diversity reduces farmers' willingness to pay for indemnity insurance, suggesting adverse selection. In contrast, drought index insurance remains equally attractive regardless of diversity. These effects hold across different insurance designs and risk preferences. Our findings offer valuable insights for farmers, insurers, and policymakers aiming to build resilient, sustainable agricultural systems.

Suggested Citation

  • Nicolas Alou & Sergei Schaub & Martin Quaas & Robert Finger, 2026. "Coping With Production Risk: Effects of Sown Plant Diversity on the Attractiveness of Crop Insurance in Grasslands," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 48(4), pages 1119-1134, September.
    • Handle: RePEc:wly:apecpp:v:48:y:2026:i:4:p:1119-1134
    DOI: 10.1002/aepp.70081
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/aepp.70081
    Download Restriction: no
    File URL: https://libkey.io/10.1002/aepp.70081?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:apecpp:v:48:y:2026:i:4:p:1119-1134. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2040-5804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.