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An attempt to modelling revenue insurance schemes at the farm level by means of Positive Mathematical Programming

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  • Severini, Simone
  • Cortignani, Raffaele

Abstract

Farmers face increasing income uncertainty and the debate is growing on the role of insurance schemes and of public support in this field. This paper applies a PMP modelling approach that takes into explicit consideration risk aversion behaviour to test its applicability to evaluating the potential impact of insurance schemes. This is done by introducing a revenue insurance scheme into a model developed on a small group of crop farms in Italy. The paper represents a preliminary assessment of the soundness of the proposed approach. It identifies some limitations that should be overcome to improve the proposed approach. Despite these limitations, it seems a useful tool to investigate the impact of insurance schemes and policy relevant parameters such as premium and coverage rates. Indeed, it permits the assessment of how this affects production choices, farm profitability and the impact of public support to reduce the net premium paid by farmers.

Suggested Citation

  • Severini, Simone & Cortignani, Raffaele, 2011. "An attempt to modelling revenue insurance schemes at the farm level by means of Positive Mathematical Programming," 122nd Seminar, February 17-18, 2011, Ancona, Italy 99431, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa122:99431
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    File URL: http://purl.umn.edu/99431
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    References listed on IDEAS

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    1. Joseph W. Glauber, 2004. "Crop Insurance Reconsidered," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1179-1195.
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    Cited by:

    1. Severini, Simone & Cortignani, Raffaele, 2011. "Modeling farmer participation to a revenue insurance scheme by means of Positive Mathematical Programming," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 116001, European Association of Agricultural Economists.

    More about this item

    Keywords

    Insurance schemes; PMP; Farmers’ behaviour; Risk aversion; Agricultural and Food Policy; Q12; C61; Q18;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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