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Weather Derivatives as Risk Management Tool in Ecuador: A Case Study of Rice Production

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  • Vedenov, Dmitry V.
  • Sanchez, Leonardo

Abstract

This paper analyzes efficiency of weather derivatives as insurance instruments for rice in Ecuador. Weather derivatives were constructed for each county/season combination. Complicated weather models were estimated for the index, and a copula approach was used to get the probability distributions. We find Risk-reducing efficiency varies across county and season.

Suggested Citation

  • Vedenov, Dmitry V. & Sanchez, Leonardo, 2011. "Weather Derivatives as Risk Management Tool in Ecuador: A Case Study of Rice Production," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98747, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea11:98747
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    File URL: http://purl.umn.edu/98747
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    References listed on IDEAS

    as
    1. Fafchamps, Marcel & Lund, Susan, 2003. "Risk-sharing networks in rural Philippines," Journal of Development Economics, Elsevier, vol. 71(2), pages 261-287, August.
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    More about this item

    Keywords

    agricultural risk management; index insurance; weather derivatives; copula approach; rice production; Agribusiness; Crop Production/Industries; Risk and Uncertainty; Q14; Q59;

    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other

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