The Effectiveness of Area-Based Yield Crop Risk Insurance in China

Qiao, Zhang; Wang, Ke

doi:10.1080/10807039.2011.571078

Cited by 8 publications

(3 citation statements)

References 20 publications

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“…A number of areas in China sometimes face severe weather and agricultural disasters (Zhang et al, 2011;Boyd et al, 2011). One such area is Western China, where the possibility exists for severe cyclical droughts.…”

Section: Background Regarding Agricultural Risk In Inner Mongolia and Chinamentioning

confidence: 99%

Factors affecting crop insurance purchases in China: the Inner Mongolia region

Boyd

Pai

Qiao

et al. 2011

China Agricultural Economic Review

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Purpose -The purpose of this paper is to explain the factors affecting crop insurance purchases by farmers in Inner Mongolia, China. Design/methodology/approach -A survey of farmers in Inner Mongolia, China, is undertaken. Selected variables are used to explain crop insurance purchases, and a probit regression model is used for the analysis. Findings -Results show that a number of variables explain crop insurance purchases by farmers in Inner Mongolia. Of the eight variables in the model, seven are statistically significant. The eight variables used to explain crop insurance purchases are: knowledge of crop insurance, previous purchases of crop insurance, trust of the crop insurance company, amount of risk taken on by the farmer, importance of low crop insurance premium, government as the main information source for crop insurance, role of head of village, and number of family members working in the city. Research limitations/implications -A possible limitation of the study is that data includes only one geographic area, Inner Mongolia, China, and so results may not always fully generalize to all regions of China, for all situations. Practical implications -Crop insurance has been recently expanded in China, and the information from this study should be useful for insurance companies and government policy makers that are attempting to increase the adoption rate of crop insurance in China. Social implications -Crop insurance may be a useful approach for stabilizing the agricultural sector, and for increasing agricultural production and food security in China. Originality/value -This is the first study to quantitatively model the factors affecting crop insurance purchases by farmers in Inner Mongolia, China.

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Section: Background Regarding Agricultural Risk In Inner Mongolia and Chinamentioning

confidence: 99%

Factors affecting crop insurance purchases in China: the Inner Mongolia region

Boyd

Pai

Qiao

et al. 2011

China Agricultural Economic Review

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“…The weather station could have favorable weather, while the farmer some distance away from the weather station could face adverse weather and crop losses, and not receive an indemnity payment. This is known as "basis risk," and is a main challenge regarding weather index insurance (Woodard and Garcia, 2008;Fuchs and Wolff, 2011;Norton et al, 2013;Zhang et al, 2011;Paulson et al, 2010;Elabed et al, 2013;Clarke et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

Factors affecting farmers’ willingness to purchase weather index insurance in the Hainan Province of China

Lin

Pai

Porth

et al. 2015

Agricultural Finance Review

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Purpose -The purpose of this paper is to explain the factors affecting farmers' willingness to purchase weather index insurance for crops in China, in the Province of Hainan, and to also provide additional background information on weather index insurance. Design/methodology/approach -A survey of 134 farmers was undertaken in Hainan, China, regarding their willingness to purchase weather index insurance. A probit regression model was used, and a number of variables were included to explain willingness of farmers to purchase weather index insurance. Findings -In total, 11 of 15 variables in the model are found to be statistically significant in explaining farmers' willingness to purchase weather index insurance. Research limitations/implications -First, farmers' interest in weather index insurance may be limited due to basis risk. Second, some farmers may not sufficiently understand weather index insurance and so may not purchase it, and a considerable portion of farmers may also require a subsidy if they are to purchase weather insurance. Practical implications -Weather index insurance may provide a lower cost alternative than traditional crop insurance, however, basis risk remains a main challenge. Originality/value -This is the first study to quantitatively study the factors affecting the willingness of farmers to purchase weather index insurance for agriculture in the province of Hainan, China.

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“…Zhang et al. () empirically modeled area‐based insurance and MPCI for wheat farmers in two counties in China. The authors concluded that while area‐based insurance can reduce asymmetric information issues relative to MPCI, it introduces basis risk for farmers.…”

Section: Introductionmentioning

confidence: 99%

The impacts of multiperil crop insurance on Indonesian rice farmers and production

Fadhliani

Luckstead²,

Wailes³

2018

Agricultural Economics

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This article analyzes the effect of multiperil crop insurance policy for risk-averse Indonesian rice farmers located in Tuban and Gresik Regencies of the East Java Province. Based on the model, comparative static analysis of a change in policy variables (coverage levels and premium subsidies) on input use through the coupling, wealth, and insurance effects are presented. The comparative static results are largely ambiguous and left as empirical questions. Consequently, the model is numerically simulated to quantify the effects of different coverage levels and subsidy rates on input use, expected net insurance payments, and certainty equivalents. The empirical analysis shows that MPCI crop insurance results in a decline in expected yield for coverage levels above about 82.5% for both regencies. Furthermore, higher subsidy rates amplify the reduction in input use and yield. Therefore, incomplete coverage with relatively low premium subsidies is the best policy to minimize the impact on input use and yield. However, from the farmers' perspective, the optimal policy combination results from the highest coverage level and subsidy, which offer the largest expected net insurance payments and certainty equivalent. JEL classifications: G22, O13, Q18

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The Effectiveness of Area-Based Yield Crop Risk Insurance in China

Cited by 8 publications

References 20 publications

Factors affecting crop insurance purchases in China: the Inner Mongolia region

Factors affecting crop insurance purchases in China: the Inner Mongolia region

Factors affecting farmers’ willingness to purchase weather index insurance in the Hainan Province of China

The impacts of multiperil crop insurance on Indonesian rice farmers and production

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