IDEAS home Printed from https://ideas.repec.org/p/ags/eaa123/122453.html
   My bibliography  Save this paper

Development of private insurance schemes as a means to reduce water overexploitation during drought events. A case study in Campo de Cartagena (Segura River Basin, Spain)

Author

Listed:
  • Perez Blanco, Carlos Dionisio
  • Gomez Gomez, Carlos Mario

Abstract

Water is a key input in the production of many goods and services and under certain conditions can become a critical limiting factor with significant impacts on regional development. This is the case of many agricultural European Mediterranean basins, where water deficit during drought events is partially covered by illegal abstractions, mostly from aquifers, which are tolerated by the authorities. Groundwater overexploitation for irrigation has created in these areas an unprecedented environmental catastrophe that threatens ecosystems sustainability, urban water supply and the current model of development. Market-based drought insurance systems have the potential to introduce the necessary incentives to reduce overexploitation during drought events and remove the high costs of the drought indemnity paid by the government. This paper develops a methodology to obtain the optimum risk premium based on concatenated stochastic models. The methodology is applied to the agricultural district of Campo de Cartagena (Segura River Basin, Spain). Results show that the prices in a hypothetic competitive private drought insurance market would be reasonable and the expected environmental outcomes significant.

Suggested Citation

  • Perez Blanco, Carlos Dionisio & Gomez Gomez, Carlos Mario, 2012. "Development of private insurance schemes as a means to reduce water overexploitation during drought events. A case study in Campo de Cartagena (Segura River Basin, Spain)," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122453, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa123:122453
    as

    Download full text from publisher

    File URL: http://purl.umn.edu/122453
    Download Restriction: no

    References listed on IDEAS

    as
    1. Dolores Tirado & Carlos M. Gómez & Javier Lozano, 2006. "Efficiency improvements and water policy in the balearic islands: a general equilibrium approach," Investigaciones Economicas, Fundación SEPI, vol. 30(3), pages 441-463, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Drought insurance; stochastic models; groundwater; agriculture; Risk and Uncertainty; Q15; Q18; Q25; Q51; Q58;

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ags:eaa123:122453. 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: http://edirc.repec.org/data/eaaeeea.html .

    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.