IDEAS home Printed from
   My bibliography  Save this paper

Catastrophic crop insurance effectiveness: does it make a difference how yield losses are conditioned?


  • Bokusheva, Raushan
  • Conradt, Sarah


The study evaluates the effectiveness of a catastrophic drought-index insurance developed by applying two alternative methods - the standard regression analysis and the copula approach. Most empirical analyses obtain estimates of the dependence of crop yields on weather by employing linear regression. By doing so, they assume that the sensitivity of yields to weather remains constant over the whole distribution of the weather variable and can be captured by the effect of the weather index on the yield conditional mean. In our study we evaluate, whether the prediction of farm yield losses can be done more accurately by conditioning yields on extreme realisations of a weather index. Therefore, we model the dependence structure between yields and weather by employing the copula approach. Our preliminary results suggests that the use of copulas might be a more adequate way to design and rate weather-based insurance against extreme events.

Suggested Citation

  • Bokusheva, Raushan & Conradt, Sarah, 2012. "Catastrophic crop insurance effectiveness: does it make a difference how yield losses are conditioned?," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122443, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa123:122443

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Genest, Christian & RĂ©millard, Bruno & Beaudoin, David, 2009. "Goodness-of-fit tests for copulas: A review and a power study," Insurance: Mathematics and Economics, Elsevier, vol. 44(2), pages 199-213, April.
    2. Conradt, Sarah & Bokusheva, Raushan & Finger, Robert & Kussaiynov, Talgat, 2012. "Yield trend estimation in the presence of non-constant technological change and weather effects," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122541, European Association of Agricultural Economists.
    3. Raushan Bokusheva, 2011. "Measuring dependence in joint distributions of yield and weather variables," Agricultural Finance Review, Emerald Group Publishing, vol. 71(1), pages 120-141, May.
    4. Jerry R. Skees & J. Roy Black & Barry J. Barnett, 1997. "Designing and Rating an Area Yield Crop Insurance Contract," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 430-438.
    Full references (including those not matched with items on IDEAS)

    More about this item


    catastrophic insurance; weather-based insurance; copula; Risk and Uncertainty; C18; Q14;

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    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:ags:eaa123:122443. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.