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Author: Chang Xu (Ph. D. in agricultural economics)
Publisher:
ISBN:
Category : Agriculture
Languages : en
Pages : 152
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Book Description
In Chapter 2, I empirically test the theoretical prediction presented in Chapter 1 that access to indemnity payments from index insurance will increase participation in informal risk sharing. I utilize data provided by the International Livestock Research Institute (ILRI). ILRI piloted Index-Based Livestock Insurance (IBLI) program with pastoralists in Kenya. A propensity score matching model is used to compare the tendency to give and receive informal transfers (cash and in-kind) between pastoralists who have received index insurance indemnity and those who have not. Results suggest a complementary relationship between access to index insurance indemnity and informal risk sharing participation, implying a crowding-in effect of the formal insurance on informal insurance. The results are consistent with the theoretical results presented in Chapter 1. The effectiveness of index insurance relies on the ability of the index to accurately predict the outcome of target. Thus, in Chapter 3, I study how to incorporate the Normalized Differenced Vegetation Index (NDVI) to provide better predictions for soybean yields in ten major producing states in the United States. To account for geographical heterogeneity, I use the Geographically Weighted Regression (GWR) model and the Flexible Fourier Transform (FFT) model. Regression results from GWR and FFT show that the responses of crop yields to NDVI during the growing season vary across geographical locations. The out-of-sample cross-validation forecasts indicate that accounting for geographical heterogeneity improves forecasts by reducing forecast errors.
Author: Chang Xu (Ph. D. in agricultural economics)
Publisher:
ISBN:
Category : Agriculture
Languages : en
Pages : 152
Get Book Here
Book Description
In Chapter 2, I empirically test the theoretical prediction presented in Chapter 1 that access to indemnity payments from index insurance will increase participation in informal risk sharing. I utilize data provided by the International Livestock Research Institute (ILRI). ILRI piloted Index-Based Livestock Insurance (IBLI) program with pastoralists in Kenya. A propensity score matching model is used to compare the tendency to give and receive informal transfers (cash and in-kind) between pastoralists who have received index insurance indemnity and those who have not. Results suggest a complementary relationship between access to index insurance indemnity and informal risk sharing participation, implying a crowding-in effect of the formal insurance on informal insurance. The results are consistent with the theoretical results presented in Chapter 1. The effectiveness of index insurance relies on the ability of the index to accurately predict the outcome of target. Thus, in Chapter 3, I study how to incorporate the Normalized Differenced Vegetation Index (NDVI) to provide better predictions for soybean yields in ten major producing states in the United States. To account for geographical heterogeneity, I use the Geographically Weighted Regression (GWR) model and the Flexible Fourier Transform (FFT) model. Regression results from GWR and FFT show that the responses of crop yields to NDVI during the growing season vary across geographical locations. The out-of-sample cross-validation forecasts indicate that accounting for geographical heterogeneity improves forecasts by reducing forecast errors.
Author: Christopher Joonhee Rue
Publisher:
ISBN: 9781109662955
Category :
Languages : en
Pages :
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Book Description
Agricultural risk is a particularly damaging problem for farmers in developing countries who do not have access to financial safety nets or the assets to withstand severe crop failure. Because multi-peril individualized crop insurance is plagued with costly informational problems, much attention has been paid to index-based insurance as a tool to mitigate risk. However, several recent experiences with index insurance products in developing countries have had lower-than-expected participation. In this thesis, I revisit the microeconomic framework upon which area yield insurance, a common type of index insurance, is based. I relax key assumptions on loading costs and the presence of informal risk sharing arrangements (IRSA's) that guarantee a consumption minimum. In adding elements of realism to the model, I find that predictions for demand are very sensitive to household characteristics like risk preferences and wealth, and that overall demand predictions are lower than under the prevoius, more restrictive assumptions. Further, institutional characteristics like the presence of subsidies or the strength of IRSA's have the potential to severely impact demand for index insurance. The context for the empirical analysis is the Lambayeque valley in the north coast of Peru, where policymakers in the region are considering expanding an infant index insurance market. Under the original, simplified assumptions, 86.5% of farmers in the valley would demand an area yield insurance contract. However, demand falls when introducing loading and IRSA's, and demand predictions are sensitive to the level of risk aversion, wealth, the strengh of the IRSA's and the presence of subsidies. My findings suggest that, in the research context, comprehensive information on household and institutional characteristics are key in performing quality ex-ante demand analyses of index insurance.
Author: Steve Boucher
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
Moral hazard and adverse selection impede the development of formal crop insurance markets in developing countries. Besides, the risk mitigation provided by informal risk-sharing arrangements is restricted by their inability to protect against covariate shocks. In this context, index-based insurance is seen as a promising scheme as it is immune to moral hazard and adverse selection and may offer effective protection against covariate shocks. It would thus seem that the two institutions are ideal complements. Unfortunately, this intuition ignores the potential effects on incentives and behavior generated by the interaction between both schemes. This paper explores this interaction in a model with moral hazard and shows that the formal contract may crowd out informal risk-sharing if it is offered to individuals. Second, we find that both risk-taking and welfare may be reduced by the introduction of index insurance if the premium is set too high. If the formal insurance is offered to the group instead of the individual, the impact on moral hazard is internalized and welfare increases.
Author: Maurizio Tiepolo
Publisher: Springer
ISBN: 3319590960
Category : Technology & Engineering
Languages : en
Pages : 375
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Book Description
This book is open access under a CC BY 4.0 license. This book aims to inspire decision makers and practitioners to change their approach to climate planning in the tropics through the application of modern technologies for characterizing local climate and tracking vulnerability and risk, and using decision-making tools. Drawing on 16 case studies conducted mainly in the Caribbean, Central America, Western and Eastern Africa, and South East Asia it is shown how successful integration of traditional and modern knowledge can enhance disaster risk reduction and adaptation to climate change in the tropics. The case studies encompass both rural and urban settings and cover different scales: rural communities, cities, and regions. In addition, the book looks to the future of planning by addressing topics of major importance, including residual risk integration in local development plans, damage insurance and the potential role of climate vulnerability reduction credits. In many regions of the tropics, climate planning is growing but has still very low quality. This book identifies the weaknesses and proposes effective solutions.
Author: Hong Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
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Book Description
Accurate crop yield forecasting is central to effective risk management for many stakeholders, including farmers, insurers, and governments, in various practices, such as crop management, sales and marketing, insurance policy design, premium rate setting, and reserving. This paper rst investigates an innovative approach of yield forecasting using a dynamic factor model. Based on the proposed approach, we then design an enhanced weather index-based insurance (IBI) policy. The dynamic factor approach is motivated by its ability to effectively summarize the information in a large set of explanatory variables with common factors of a much lower dimension. This makes it possible to use an extensive set of variables in crop yield prediction without worrying about identication issues. Using both county-level and state-level crop production data from the state of Illinois, U.S., the empirical results show that the dynamic factor approach produces more accurate in- and out-of-sample forecasting results compared to the classical statistical models. The empirical results also support that the proposed IBI policy based on the dynamic forecasting model has small basis risk. This, in turn, greatly improves the IBI's hedge effectiveness against agricultural production as well as increases its practicality as an insurance policy for agriculture.
Author: Harold Alderman
Publisher: World Bank Publications
ISBN: 0821370375
Category : Social Science
Languages : en
Pages : 48
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Book Description
Uninsured risk had far-reaching consequences for rural growth as well as poverty reduction. A range of informal mechanisms to insure rural households against the impact of shocks, but they are a modest component of a risk layering strategy for well-off households and even less protective for low-income households. Formal insurance mechanisms have inherent market imperfections. State interventions to address these limitations have proven costly and generally are targeted poorly. Recent developments in microfinance as well as in insurance marketing have opened new possibilities for household risk reduction. Index insurance, such as weather indexing, addresses other inherent problems in insurance by using an indicator that is not affected by individual behaviour and may address monitoring costs and moral hazard. A number of innovations using index insurance are being tried currently in diverse settings ranging from India to Mongolia to Malawi. Marketing costs may limit the provision of such insurance to small farmers, but even in such cases microfinance institutes may serve as market intermediaries. Moreover, state and submational governments can use insurance to achieve countercyclical funding programs. In this vein, municipal governments in Mexico have used insurance to finance disaster contingency while the World Food Program has insured a portion of its emergency assistance to Ethiopia. Humanitarian organizations and NGOs may also seek insurance in this manner.
Author: Stephane Hallegatte
Publisher: World Bank Publications
ISBN: 1464806748
Category : Business & Economics
Languages : en
Pages : 227
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Book Description
Ending poverty and stabilizing climate change will be two unprecedented global achievements and two major steps toward sustainable development. But the two objectives cannot be considered in isolation: they need to be jointly tackled through an integrated strategy. This report brings together those two objectives and explores how they can more easily be achieved if considered together. It examines the potential impact of climate change and climate policies on poverty reduction. It also provides guidance on how to create a “win-win†? situation so that climate change policies contribute to poverty reduction and poverty-reduction policies contribute to climate change mitigation and resilience building. The key finding of the report is that climate change represents a significant obstacle to the sustained eradication of poverty, but future impacts on poverty are determined by policy choices: rapid, inclusive, and climate-informed development can prevent most short-term impacts whereas immediate pro-poor, emissions-reduction policies can drastically limit long-term ones.
Author: Asian Development Bank
Publisher: Asian Development Bank
ISBN: 9292622668
Category : Business & Economics
Languages : en
Pages : 93
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Book Description
Disasters damage and destroy infrastructure and disrupt economic activities and services, potentially delaying long-term development and hampering efforts to reduce poverty in the region. Countries require a strong enabling environment for disaster risk financing to ensure the timely availability of post-disaster funding. This report presents a comprehensive diagnostics tool kit that countries can apply to assess the financial management of disaster risk. The framework examines the state of the enabling environment and provides a basis to enhance financial resilience with insurance and other risk transfer instruments. It incorporates lessons from the country diagnostics assessments for Fiji, Nepal, Pakistan, and Sri Lanka that made use of the tool kit and methodology.
Author: Olivier Mahul
Publisher: World Bank Publications
ISBN: 0821382195
Category : Business & Economics
Languages : en
Pages : 250
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Book Description
Governments in developing countries have been increasingly involved in the support of agricultural (crop and livestock) insurance programs in recent years. In their attempts to design and implement agricultural insurance, they have sought technical and financial assistance from the international community and particularly from the World Bank. One of the recurrent requests from governments regards international experience with agricultural insurance, not only in developed countries, where in some cases agricultural insurance has been offered for more than a century, but also in middleand low-income countries. Governments are particularly interested in the technical, operational, financial, and institutional aspects of public support to agricultural insurance. 'Government Support to Agricultural Insurance' informs public and private decision makers involved in agricultural insurance about recent developments, with a particular focus on middle- and low-income countries. It presents an updated picture of the spectrum of institutional frameworks and experiences with agricultural insurance, ranging from countries in which the public sector provides no support to those in which governments heavily subsidize agricultural insurance. This analysis is based on a survey conducted by the World Bank s agricultural insurance team in 2008 in 65 developed and developing countries. Drawing on the survey results, the book identifies some key roles governments can play to support the development of sustainable, affordable, and cost-effective agricultural insurance programs.
Author: William R. Sutton
Publisher: World Bank Publications
ISBN: 0821397699
Category : Business & Economics
Languages : en
Pages : 201
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Book Description
The risks and opportunities of climate change for agriculture can be effectively dealt only by aligning policies, developing institutional capabilities, and investing in infrastructure and farms, as per the experiences of Albania, FYR Macedonia, Moldova, and Uzbekistan.
