This paper investigates the factors affecting the demand for crop-hail insurance and explores the potential relation with pesticide use for a sample of French farmers on the period 1993-2004, for the Meuse department. An econometric model involving two simultaneous equations with mixed censored/continuous dependent variables is estimated. Estimation results show that, in the case of rapeseed, insurance demand is significantly and positively related to pesticide use, but that the magnitude of this interaction is quite small. Insurance demand is positively influenced by the coefficient of variation of yield and the loss ratio, and is negatively influenced by Common Agricultural Policy subsidies and diversification of activity at farm level. These results shed light on the determinants of French farmers' decisions related to risk management.

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the authors. The publication of this document has been authorised by Ken Ash, Director of the Trade and Agriculture Directorate. This paper and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law Comments are welcome and may be sent to tad.contact@oecd.org.

Summary Climate change is expected to have numerous and complex impacts on water resources, with consequences for agricultural production through changes in crop water requirements; the availability and quality of water; and increases in the frequency and severity of extreme weather events such as droughts and floods. Although there is substantial uncertainty about the magnitude of impacts, especially at the local level, this does not call for inaction. On the basis of the recent work undertaken by OECD in this area, we identify and discuss three main dimensions for a comprehensive adaptation strategy for agricultural water management: i) creating an enabling environment to foster on‐farm adaptive capacities through policies targeted at innovation, education, and advisory and extension services; ii) improving agricultural water management through the development of flexible and robust instruments, such as water pricing and water markets, to deal with both short‐run water shortages and long‐run water stress; iii) developing and improving risk management tools for droughts and floods to ensure that the true cost of risks is signalled to farmers while at the same time improving the efficiency of risk allocation. We highlight the importance of policy coherence in recognising the linkages between climate change adaptation and mitigation.

We consider an oligopoly market where firms offer insurance coverage against a risk characterised by aggregate uncertainty. Firms behave as if they were risk averse for a standard reason of costly external finance. The model consists in a two-stage game where firms choose their internal capital level at stage one and compete on price at stage two. We characterise the subgame perfect Nash equilibria of this game and focus attention on the strategic impact of insurers capital choice. We discuss the model with regard to the insurance industry specificities and regulation.

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