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An Assessment of the Canadian Federal-Provincial Crop Production Insurance Program under Future Climate Change Scenarios in Ontario

  • Li, Shuang
  • Ker, Alan P.
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    Research and observations indicate climate change has and will have an impact on On- tario eld crop production. Little research has done to forecast how climate change might in uence the Canadian Federal-Provincial Crop Insurance program, including its premium rates and reserve fund balances, in the future decades. This paper proposes using a mixture of two normal yield probability distribution model to model crop yield conditions under hypothetical climate change scenarios. Then superimposes Crop Insur- ance premium rate and reserve fund balance calculations onto the yield model to forecast their trends and uctuation situations in the future decades. We nd under the scenarios where climate change alters the probability of a lower yield year occurring and where climate change alters yield averages, both have more signi cant impacts on premium rates and reserve fund balances, compared to the scenarios where climate change alters yield variations. The results of this research will help Agricorp Ltd. identify the likely frequency and magnitude of both insurance premium rate uctuations and reserve fund balance uctuations under di erent climate change scenarios. Therefore the results can be used to help Agricorp Ltd. identify and forecast both premium rate uctuation risk and reserve fund liquidity risk.

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    File URL: http://purl.umn.edu/151213
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    Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 151213.

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    Date of creation: 2013
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    Handle: RePEc:ags:aaea13:151213
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    1. Richard E. Just & Quinn Weninger, 1999. "Are Crop Yields Normally Distributed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 287-304.
    2. Alan P. Ker & Keith Coble, 2003. "Modeling Conditional Yield Densities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 291-304.
    3. Alan P. Ker & Barry K. Goodwin, 2000. "Nonparametric Estimation of Crop Insurance Rates Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 463-478.
    4. Prabhat Barnwal & Koji Kotani, 2010. "Impact of variation in climatic factors on crop yield: A case of rice crop in Andhra Pradesh, India," Working Papers EMS_2010_17, Research Institute, International University of Japan.
    5. Jesse Tack & Ardian Harri & Keith Coble, 2012. "More than Mean Effects: Modeling the Effect of Climate on the Higher Order Moments of Crop Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1037-1054.
    6. Gallagher, Paul W., 1987. "U.S. Soybean Yields: Estimation and Forecasting with Non-Symmetric Disturbances," Staff General Research Papers 10779, Iowa State University, Department of Economics.
    7. Octavio A. Ramirez & Sukant Misra & James Field, 2003. "Crop-Yield Distributions Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 108-120.
    8. Barry K. Goodwin & Alan P. Ker, 1998. "Nonparametric Estimation of Crop Yield Distributions: Implications for Rating Group-Risk Crop Insurance Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 139-153.
    9. Nayak, Govindaray & Turvey, Calum G., 1999. "Empirical Issues In Crop Reinsurance Decisions," 1999 Annual meeting, August 8-11, Nashville, TN 21612, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Bruce A. McCarl & Xavier Villavicencio & Ximing Wu, 2008. "Climate Change and Future Analysis: Is Stationarity Dying?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1241-1247.
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