Dataset Information

Phenology Information Contributes to Reduce Temporal Basis Risk in Agricultural Weather Index Insurance.

ABSTRACT: Weather risks are an essential and increasingly important driver of agricultural income volatility. Agricultural insurances contribute to support farmers to cope with these risks. Among these insurances, weather index insurances (WII) are an innovative tool to cope with climatic risks in agriculture. Using WII, farmers receive an indemnification not based on actual yield reductions but are compensated based on a measured weather index, such as rainfall at a nearby weather station. The discrepancy between experienced losses and actual indemnification, basis risk, is a key challenge. In particular, specifications of WII used so far do not capture critical plant growth phases adequately. Here, we contribute to reduce basis risk by proposing novel procedures how occurrence dates and shifts of growth phases over time and space can be considered and test for their risk reducing potential. Our empirical example addresses drought risks in the critical growth phase around the anthesis stage in winter wheat production in Germany. We find spatially explicit, public and open databases of phenology reports to contribute to reduce basis risk and thus improve the attractiveness of WII. In contrast, we find growth stage modelling based on growing degree days (thermal time) not to result in significant improvements.

SUBMITTER: Dalhaus T

PROVIDER: S-EPMC5758701 | biostudies-literature | 2018 Jan

REPOSITORIES: biostudies-literature

ACCESS DATA

Publications

Phenology Information Contributes to Reduce Temporal Basis Risk in Agricultural Weather Index Insurance.

Dalhaus Tobias T Musshoff Oliver O Finger Robert R

Scientific reports 20180108 1

Weather risks are an essential and increasingly important driver of agricultural income volatility. Agricultural insurances contribute to support farmers to cope with these risks. Among these insurances, weather index insurances (WII) are an innovative tool to cope with climatic risks in agriculture. Using WII, farmers receive an indemnification not based on actual yield reductions but are compensated based on a measured weather index, such as rainfall at a nearby weather station. The discrepanc ...[more]

PMID: 29311587

Similar Datasets

Project description:Agricultural index insurance contracts increasingly use remote sensing data to estimate losses and determine indemnity payouts. Index insurance contracts inevitably make errors, failing to detect losses that occur and issuing payments when no losses occur. The quality of these contracts and the indices on which they are based, need to be evaluated to assess their fitness as insurance, and to provide a guide to choosing the index that best protects the insured. In the remote sensing literature, indices are often evaluated with generic model evaluation statistics such as R2 or Root Mean Square Error that do not directly consider the effect of errors on the quality of the insurance contract. Economic analysis suggests using measures that capture the impact of insurance on the expected economic well-being of the insured. To bridge the gap between the remote sensing and economic perspectives, we adopt a standard economic measure of expected well-being and transform it into a Relative Insurance Benefit (RIB) metric. RIB expresses the welfare benefits derived from an index insurance contract relative to a hypothetical contract that perfectly measures losses. RIB takes on its maximal value of one when the index contract offers the same economic benefits as the perfect contract. When it achieves none of the benefits of insurance it takes on a value of zero, and becomes negative if the contract leaves the insured worse off than having no insurance. Part of our contribution is to decompose this economic well-being measure into an asymmetric loss function. We also argue that the expected well-being measure we use has advantages over other economic measures for the normative purpose of insurance quality ascertainment. Finally, we illustrate the use of the RIB measure with a case study of potential livestock insurance contracts in Northern Kenya. We compared 24 indices that were made with 4 different statistical models and 3 remote sensing data sources. RIB for these indices ranged from 0.09 to 0.5, and R2 ranged from 0.2 to 0.51. While RIB and R2 were correlated, the model with the highest RIB did not have the highest R2. Our findings suggest that, when designing and evaluating an index insurance program, it is useful to separately consider the quality of a remote sensing-based index with a metric like the RIB instead of a generic goodness-of-fit metric.

Project description:AimMeasuring avian migration can prove challenging given the spatial scope and the diversity of species involved. No one monitoring technique provides all the pertinent measures needed to capture this macroscale phenomenon - emphasizing the need for data integration. Migration phenology is a key metric characterizing large-scale migration dynamics and has been successfully quantified using weather surveillance radar (WSR) data and community science observations. Separately, both platforms have their limitations and measure different aspects of bird migration. We sought to make a formal comparison of the migration phenology estimates derived from WSR and eBird data - of which we predict a positive correlation.LocationContiguous United States.Time period2002-2018.Major taxa studiedMigratory birds.MethodsWe estimated spring and autumn migration phenology at 143 WSR stations aggregated over a 17-year period (2002-2018), which we contrast with eBird-based estimates of spring and autumn migration phenology for 293 nocturnally migrating bird species at the 143 WSR stations. We compared phenology metrics derived from all species and WSR stations combined, for species in three taxonomic orders (Anseriformes, Charadriiformes and Passeriformes), and for WSR stations in three North American migration flyways (western, central and eastern).ResultsWe found positive correlations between WSR and eBird-based estimates of migration phenology and differences in the strength of correlations among taxonomic orders and migration flyways. The correlations were stronger during spring migration, for Passeriformes, and generally for WSR stations in the eastern flyway. Autumn migration showed weaker correlation, and in Anseriformes correlations were weakest overall. Lastly, eBird-based estimates slightly preceded those derived from WSR in the spring, but trailed WSR in the autumn, suggesting that the two data sources measure different components of migration phenology.Main conclusionsWe highlight the complementarity of these two approaches, but also reveal strong taxonomic and geographic differences in the relationships between the platforms.

Dataset Information

Phenology Information Contributes to Reduce Temporal Basis Risk in Agricultural Weather Index Insurance.

Publications

Phenology Information Contributes to Reduce Temporal Basis Risk in Agricultural Weather Index Insurance.

Similar Datasets

OmicsDI is part of the ELIXIR infrastructure

Tweets