Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ags/aaea09/49350.html
   My bibliography  Save this paper

Spatial and Temporal On-Farm Risk Management - Crop Production Scheduling and Index Insurance Strategies

Author

Listed:
  • Lin, Shanshan
  • Mullen, Jeffrey D.
  • Hoogenboom, Gerrit
Abstract
An agronomic crop growth model, Decision Support System for Agro-Technology Transfer (DSSAT), is used to find optimal crop management strategies for cotton production in Mitchell, Miller, and Lee Counties in Georgia during the past 10 years. Planting date and irrigation threshold are the two variables optimized to maximize farmer's expected utility. A decreasing absolute risk aversion - constant relative risk aversion (DARA-CRRA) utility function is used to examine crop management decision that can be influenced by changes in inter-temporal risk behavior. Comparison is made from management perspective - one is dynamic crop management strategy that varies each year; one is static (constant) strategy over 10 years. Based on the best crop management strategies, index insurance products are designed to help farmers further reduce production risk. The impact of geographical basis risk was assessed by comparing the risk reduction generated from index insurance contracts based on different weather stations; the impact of temporal basis risk is assessed by allowing separate contracts to be purchased for different sub-periods during the entire period.

Suggested Citation

  • Lin, Shanshan & Mullen, Jeffrey D. & Hoogenboom, Gerrit, 2009. "Spatial and Temporal On-Farm Risk Management - Crop Production Scheduling and Index Insurance Strategies," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49350, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea09:49350
    DOI: 10.22004/ag.econ.49350
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/49350/files/paper_aaea_shanshan.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.49350?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Schnitkey, Gary D. & Sherrick, Bruce J. & Irwin, Scott H., 2002. "Evaluation of Risk Reductions Associated with Multi-Peril Crop Insurance Products," 2002 Regional Committee NC-221, October 7-8, 2002, Denver, Colorado 132375, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    2. Skees, Jerry & Gober, Stephanie & Varangis, Panos & Le, 2001. "Developing rainfall-based index insurance in Morocco," Policy Research Working Paper Series 2577, The World Bank.
    3. Richards, Timothy J. & Manfredo, Mark R. & Sanders, Dwight R., 2004. "Pricing Weather Derivatives," Working Papers 28536, Arizona State University, Morrison School of Agribusiness and Resource Management.
    4. Olivier Mahul, 2001. "Optimal insurance against climatic experience," Post-Print hal-01952102, HAL.
    5. Escalante, Cesar L. & Rejesus, Roderick M., 2005. "Farmland Control Decisions under Different Intertemporal Risk Behavioral Constructs," 2005 Annual meeting, July 24-27, Providence, RI 19113, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Calum G. Turvey, 2001. "Weather Derivatives for Specific Event Risks in Agriculture," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 23(2), pages 333-351.
    7. Dwight R. Sanders, 2004. "Pricing Weather Derivatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1005-1017.
    8. 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.
    9. Mario Miranda & Dmitry V. Vedenov, 2001. "Innovations in Agricultural and Natural Disaster Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 650-655.
    10. Mark R. Manfredo & Raymond M. Leuthold, 1999. "Value-at-Risk Analysis: A Review and the Potential for Agricultural Applications," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 21(1), pages 99-111.
    11. Olivier Mahul, 2001. "Optimal Insurance Against Climatic Experience," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 593-604.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lin, Shanshan & Mullen, Jeffrey D. & Hoogenboom, Gerrit, 2008. "Farm-Level Risk Management Using Irrigation and Weather Derivatives," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(2), pages 1-8, August.
    2. Barnett, Barry J. & Barrett, Christopher B. & Skees, Jerry R., 2008. "Poverty Traps and Index-Based Risk Transfer Products," World Development, Elsevier, vol. 36(10), pages 1766-1785, October.
    3. Bucheli, Janic & Dalhaus, Tobias & Finger, Robert, 2022. "Temperature effects on crop yields in heat index insurance," Food Policy, Elsevier, vol. 107(C).
    4. Juárez-Torres, Miriam & Sánchez-Aragón, Leonardo & Vedenov, Dmitry, 2017. "Weather Derivatives and Water Management in Developing Countries: An Application for an Irrigation District in Central Mexico," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(2), May.
    5. Vedenov, Dmitry V. & Barnett, Barry J., 2004. "Efficiency of Weather Derivatives as Primary Crop Insurance Instruments," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(3), pages 1-17, December.
    6. Zhang, Li, 2008. "Three essays on agricultural risk and insurance," ISU General Staff Papers 2008010108000016857, Iowa State University, Department of Economics.
    7. Isaboke, Hezron Nyarindo & Qiao, Zhang & Nyarindo, Wilckyster Nyateko & Ke, Wang, 2016. "Explaining The Perception Of Smallholders Towards Weather Index Micro-Insurance Alongside Risks And Coping Strategies," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 4(4), pages 1-19, October.
    8. Marcos Gallacher & Daniel Lema & Laura Gastaldi & Alejandro Galetto, 2016. "Climate variability and agricultural production in argentina: the role of risk-transfer mechanisms," Ensayos de Política Económica, Departamento de Investigación Francisco Valsecchi, Facultad de Ciencias Económicas, Pontificia Universidad Católica Argentina., vol. 2(4), pages 11-38, Octubre.
    9. Alexis Berg & Philippe Quirion & Benjamin Sultan, 2009. "Weather-index drought insurance in Burkina-Faso: assessment of its potential interest to farmers," Post-Print hal-00520893, HAL.
    10. Aditya Kusuma & Bethanna Jackson & Ilan Noy, 2018. "A viable and cost-effective weather index insurance for rice in Indonesia," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 43(2), pages 186-218, September.
    11. Deng, Xiaohui & Barnett, Barry J. & Hoogenboom, Gerrit & Yu, Yingzhuo & Garcia y Garcia, Axel, 2008. "Alternative Crop Insurance Indexes," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(1), pages 1-15, April.
    12. Turvey, Calum G. & Weersink, Alfons, 2005. "Pricing Weather Insurance with a Random Strike Price: An Application to the Ontario Ice Wine Harvest," 2005 Annual meeting, July 24-27, Providence, RI 19255, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Boyle, Colin F.H. & Haas, Jannik & Kern, Jordan D., 2021. "Development of an irradiance-based weather derivative to hedge cloud risk for solar energy systems," Renewable Energy, Elsevier, vol. 164(C), pages 1230-1243.
    14. Müller, Birgit & Quaas, Martin F. & Frank, Karin & Baumgärtner, Stefan, 2011. "Pitfalls and potential of institutional change: Rain-index insurance and the sustainability of rangeland management," Ecological Economics, Elsevier, vol. 70(11), pages 2137-2144, September.
    15. Turvey, Calum G. & Chantarat, Sommarat, 2006. "Weather-Linked Bonds," 2006 Agricultural and Rural Finance Markets in Transition, October 2-3, 2006, Washington, DC 133091, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    16. Kalavakonda, Vijay & Mahul, Olivier, 2005. "Crop insurance in Karnataka," Policy Research Working Paper Series 3654, The World Bank.
    17. Million Tadesse & Bekele Shiferaw & Olaf Erenstein, 2015. "Weather index insurance for managing drought risk in smallholder agriculture: lessons and policy implications for sub-Saharan Africa," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-21, December.
    18. Mengmeng Qiang & Manhong Shen & Guanjun Xia, 2023. "The effectiveness of weather index insurance in managing mariculture production risk," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(2), pages 245-262, April.
    19. Turvey, Calum G. & Norton, Michael, 2008. "An Internet-Based Tool for Weather Risk Management," Agricultural and Resource Economics Review, Cambridge University Press, vol. 37(1), pages 63-78, April.
    20. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.

    More about this item

    Keywords

    Agribusiness; Agricultural Finance; Crop Production/Industries; Farm Management; Financial Economics; Risk and Uncertainty;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea09:49350. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.