Index-based Insurances for Grasslands A Review

Index insurance schemes have been proposed as an alternative to overcome problems of asymmetric information and transaction costs when insuring agriculture with traditional indemnity-based insurances, and to allow to insure usually uninsurable land use forms such as pastures. It has been advocated that insurances based on variables highly correlating with, but independent of, the production at the farm have a particularly high potential to insure grasslands. We aim to shed light on the supply, diversity and uptake of index-based insurances for grassland production in developed countries. More specifically, this review provides a classification of grassland index insurance products, thereby incorporating the increasing possibilities of satellite imagery. It discusses ten grassland index insurance products that are on the market, summarizes their characteristics and discusses their strengths and weaknesses. A complete and verified overview was achieved by including systematizing expert interviews. Lastly, it targets to critically asses the different types of index insurances and provides an outlook on future developments. Acknowledgement :