Agricultural Finance Review: Volume 68 Issue 1

Critical success factors for weather risk transfer solutions in the agricultural sector: a reinsurer’s view

Michael Roth, Christina Ulardic, Juerg Trueb

Agricultural yield and commodity prices are very sensitive to weather patterns such as drought, excessive rain, or frost. Consequently, unseasonable weather can cause major losses…

A Bayesian approach to German agricultural yield expectations

Jette Krause

Agricultural yields depend on an encompassing set of technical and environmental factors. The development of such factors often is not fully observable, and their interactions and…

Modeling agricultural production risk and the adaptation to climate change

Robert Finger, Stéphanie Schmid

An approach that integrates biophysical simulations in an economic model is used to analyze the impact of climate change on Swiss corn and winter wheat production. Adaptation…

Revisiting the demand for agricultural insurance: the case of Spain

Alberto Garrido, David Zilberman

This paper seeks to characterize the factors that explain crop insurance participation. A stylized model of insurance demand, with a simple setup of one crop. CARA preferences…

Hedging with weather derivatives to cope with climate variability and change in grain maize production

Daniele Simone Torriani, Pierluigi Calanca, Martin Beniston, Jürg Fuhrer

The effectiveness of hedging drought risks with weather derivatives was investigated for rain‐fed grain maize production in Switzerland under current (1981‐2003) and projected…

Portfolio effects and the willingness to pay for weather insurances

Oliver Musshoff, Norbert Hirschauer, Martin Odening

Since the mid‐1990s, agricultural economists have discussed the relevance of index‐based insurances, also called “weather derivatives”, as hedging instruments for volumetric risks…

Basis risk and weather hedging effectiveness

Joshua D. Woodard, Philip Garcia

Basis risk – the risk that payoffs of a hedging instrument do not correspond to the underlying exposures – is cited as a primary concern for implementing weather data, we…

Weather‐based instruments in the context of whole‐farm risk management

Ernst Berg, Bernhard Schmitz

Recent and presumable future developments tend to increase the risks associated with farming activities. These include climate risks, which have always played an important role in…

The pricing, structure, and function of weather‐linked bonds, mortgages, and operating credit

Calum G. Turvey

This paper outlines approaches to valuating weather‐linked bonds, mortgages, and operating lines of credit. Using historical data from weather stations in Adrmore, Oklahoma, and…

Creating insurance markets for natural disaster risk in lower income countries: the potential role for securitization

Jerry R. Skees, Barry J. Barnett, Anne G. Murphy

This article considers the potential for securitizing index‐based insurance products that transfer weather and natural disaster risks from lower income countries. It begins with a…

Improving humanitarian response to slow‐onset disasters using famine‐indexed weather derivatives

Sommarat Chantarat, Calum G. Turvey, Andrew G. Mude, Christopher B. Barrett

This paper illustrates how weather derivatives indexed to forecasts of famine can be designed and used by operational agencies and donors to facilitate timely and reliable…

Challenges for use of index‐based weather insurance in lower income countries

Jerry R. Skees

This article offers some perspective on the progress and challenges of managing catastrophic weather risk in lower income countries through the use of index insurance. Innovations…