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Climate Effects on Rainfall Index Insurance Purchase Decisions

Author

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  • Novak, James L.
  • Nadolnyak, Denis A.

Abstract

Rainfall Index insurance is a pilot insurance product offered to producers of hay and pasture in 9 states. This analysis examines the expected payoff of the RI insurance for bi-monthly periods based on rainfall shortage probabilities in alternative climate phases. Differences in expected returns indicate that selection of ENSO-specific optimal intervals may result in higher returns than those based on pooled rainfall series.

Suggested Citation

  • Novak, James L. & Nadolnyak, Denis A., 2008. "Climate Effects on Rainfall Index Insurance Purchase Decisions," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46834, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saeana:46834
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    File URL: http://purl.umn.edu/46834
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    References listed on IDEAS

    as
    1. Miguel Carriquiry & Daniel E. Osgood, 2008. "Index Insurance, Probabilistic Climate Forecasts, and Production," Center for Agricultural and Rural Development (CARD) Publications 08-wp465, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Martin, Steven W. & Barnett, Barry J. & Coble, Keith H., 2001. "Developing And Pricing Precipitation Insurance," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), July.
    3. Denis Nadolnyak & Dmitry Vedenov & James Novak, 2008. "Information Value of Climate-Based Yield Forecasts in Selecting Optimal Crop Insurance Coverage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1248-1255.
    4. Podesta, Guillermo & Letson, David & Messina, Carlos & Royce, Fred & Ferreyra, R. Andres & Jones, James & Hansen, James & Llovet, Ignacio & Grondona, Martin & O'Brien, James J., 2002. "Use of ENSO-related climate information in agricultural decision making in Argentina: a pilot experience," Agricultural Systems, Elsevier, vol. 74(3), pages 371-392, December.
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    Keywords

    rainfall insurance; ENSO; expected indemnity; Production Economics; Risk and Uncertainty;

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