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Climate Effects on Rainfall Index Insurance Purchase Decisions

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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
    DOI: 10.22004/ag.econ.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. James W. Mjelde & Harvey S.J. Hill & John F. Griffiths, 1998. "A Review of Current Evidence on Climate Forecasts and Their Economic Effects in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1089-1095.
    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. 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(1), pages 1-14, July.
    5. 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.
    6. Mario J. Miranda, 1991. "Area-Yield Crop Insurance Reconsidered," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 233-242.
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    Keywords

    Production Economics; Risk and Uncertainty;

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