An Innovative Damage Model for Crop Insurance, Combining Two Hazards into a Single Climatic Index

Abstract

Extreme weather events have strong impacts on agriculture and crop insurance. In France, drought (2003, 2011, 2017, and 2018) and excess of water (2016) are considered the most significant events in terms of economic losses. The crop (re)insurance industry must estimate its financial exposure to climatic events in terms of the average annual losses and potential extreme damages. Therefore, the objective of this paper was to develop a model that links meteorological indices to crop yield losses with a specific focus on extreme climatic events. We designed a meteorological index (DOWKI: Drought and Overwhelmed Water Key Indicator) based on a water balance cumulative anomaly that can explain drought and excess of water at the department scale. We propose a crop damage model calibrated by combining historical yield records and the DOWKI values. To estimate the financial exposure of insured crops at a national level, stochastic simulations of the DOWKI were performed to produce one thousand years of yield losses. Our objective was to estimate the effect of climatic extremes affecting the global production. Simulated average annual losses and the possible maximum claim for three crops (soft winter wheat, winter barley, and sunflower) are presented in the results.

No historical evidence for increased vulnerability of French crop production to climatic hazards

“…Gammans et al (2017) corroborate the detrimental impact of high temperatures during summer or cold after planting for winter wheat. Season-scale water dearth or excess in selected departments were identified as detrimental for winter wheat and sunflower by Kapsambelis et al (2019), which corresponds with our results (Pr7 and Pr8 hazards for sunflower). Sugarbeet yields are forecasted by Guimaraes Nobre et al ( 2019), using climate modes like ENSO.…”

Review article: Design and Evaluation of Weather Index Insurance for Multi-Hazard Resilience and Food Insecurity

“…Rainfall-based indicators do not account directly for the interaction between soil and plant. Therefore, some authors suggest the use of potential evapotranspiration (ET0) to calculate soil water balance such as in Standardized precipitation evapotranspiration index (SPEI) (Bucheli et al, 2021;Kapsambelis et al, 2019b) or using ET0 to calculate Evaporative Stress Index (ESI) (Bucheli et al, 2021).…”

“…Excessive rainfall has been weakly developed in the papers analyzed in this study. Some applications to crop insurance use CPI (Kapsambelis et al, 2019b, a) and SPEI (D. Kapsambelis et al, 2019). The advantage of these indices mentioned above is that they can be used for water deficit and water excess studies.…”

Modeling the Impact of Extreme Droughts on Agriculture under Current and Future Climate Conditions Using a Spatialized Climatic Index

“…In the paper, we propose an evaluation of the frequency and intensity of extreme droughts in current climate and future climate conditions (year 2050). Our methodology is based on a simple drought index [42] correlated to crop yield losses that can be projected into the future using a global climate model-for instance, the ARPEGE-Climat Model from Meteo-France.…”

“…In [42], DOWKI was computed for representative meteorological stations at the departmental scale to match with available yield loss data, and we showed model uncertainties as we simulated all the crops losses. One notable limitation is the climate measure at a single point over the department.…”