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Agricultural Insurances Based on Meteorological Indices: Realizations, Methods and Research Agenda

Author

Listed:
  • Antoine Leblois

    (CIRED (Centre International de Recherche sur l’Environnement et le Développement))

  • Philippe Quirion

    (CIRED, CNRS, LMD-IPSL (Laboratoire de Météorologie Dynamique – Institut Pierre-Simon Laplace))

Abstract

In many low-income countries, agriculture is mostly rain-fed and yields highly depend on climatic factors. Furthermore, farmers have little access to traditional crop insurance, which suffers from high information asymmetry and transaction costs. Insurances based on meteorological indices could fill this gap since they do not face such drawbacks. However their implementation has been slow so far. In this article, we first describe the most advanced projects that have taken place in developing countries using these types of crop insurances. We then describe the methodology that has been used to design such projects, in order to choose the meteorological index, the indemnity schedule and the insurance premium. We finally draw an agenda for research in economics on this topic. In particular, more research is needed on implementation issues, on the assessment of benefits, on the way to deal with climate change, on the spatial variability of weather and on the interactions with other hedging methods.

Suggested Citation

  • Antoine Leblois & Philippe Quirion, 2010. "Agricultural Insurances Based on Meteorological Indices: Realizations, Methods and Research Agenda," Working Papers 2010.71, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2010.71
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    Cited by:

    1. Antoine Leblois & Philippe Quirion & Agali Alhassane & Seydou Traoré, 2014. "Weather Index Drought Insurance: An Ex Ante Evaluation for Millet Growers in Niger," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(4), pages 527-551, April.
    2. Kellner, Ulla & Musshoff, Oliver, 2011. "Precipitation or water capacity indices? An analysis of the benefits of alternative underlyings for index insurance," Agricultural Systems, Elsevier, vol. 104(8), pages 645-653, October.
    3. Jensen, Nathaniel & Barrett, Christopher B. & Mude, Andrew, 2014. "Index Insurance and Cash Transfers: A Comparative Analysis from Northern Kenya," MPRA Paper 61372, University Library of Munich, Germany.

    More about this item

    Keywords

    Agriculture; Insurance; Climatic Risk;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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