DEVELOPING AND PRICING PRECIPITATION INSURANCE

Production agriculture and agribusiness are exposed to many weather-related risks. Recent years have seen the emergence of an increased interest in weather-based derivatives as mechanisms for sharing risks due to weather phenomena. In this study, a unique precipitation derivative is proposed that allows the purchaser to specify the parameters of the idemnity function. Pricing methods are presented in the context of a cotton harvest example from Mississippi. Our findings show a potential for weather derivatives to serve niche markets within U.S. agriculture.


Issue Date:
2001-07
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/31155
Published in:
Journal of Agricultural and Resource Economics, Volume 26, Number 1
Page range:
261-274
Total Pages:
14




 Record created 2017-04-01, last modified 2017-08-24

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