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From the perspectives of the probable replacement of the national calamity funds by multi-peril grassland insurance, the purpose of this paper is to estimate demand for grassland production insurance.

A discrete stochastic programming model with a three-year planning horizon was used to run simulations for farms raising suckler cows primarily with grasslands. In this model, the annual area insured and some production decisions are optimized under grasland yield uncertainty, with possible ex post production-system adjustments. The effects of insurance loading cost (14 levels), insurance coverage level (three levels), risk aversion (two levels) and stock levels (forage and animal stocks vary according to grassland yields and to farm management of the previous years) were analyzed.

The results show that grassland insurance could be used as a flexible risk management tool, when farm becomes vulnerable to fodder shortfall. According to previous years’ grassland yields and to the subsequent states of hay stock and animal liveweight, the area insured could vary between nearly the none and full. Farmers with low-average stocking rate and important hay storage capacity have less incentive to buy grassland insurance. The author also demonstrates that for a given loading cost, more insurance is purchased at a coverage level of 70 percent of average yield than at higher coverage levels. The cost of self-insurance increases for important and rare losses while multi-peril grassland insurance premium decreases. Higher levels of risk aversion also raise the quantity of insurance subscribed. Eventually, insurance price is a key factor. Almost no insurance is bought for loading costs greater than 1.1 under low-risk aversion and for loading costs greater than 1.3 under moderate risk aversion.

The willingness to pay for insurance could have been overestimated for different reasons. First, basis risks have not been introduced in the simulation framework. Although the Forage Production Index performed quite well, basis risks are high enough to trigger inappropriate indemnifications in some cases. Consequences of these risks should be estimated in further research. Second, other self-insurance options and public emergency measures such as subsidized loan or reduction in social security contributions should also be considered to assess and reduce farmers vulnerability to risks.

The launching of the multi-peril grassland insurance is likely to be successful thanks to the 65 percent of public subsidies on insurance premiuml. However, considering that the loading cost is likely to be high and that demand for grassland production insurance is rather low, multi-peril grassland production insurance may struggle to continue unsubsidized.

This paper provides a framework that enables to estimate demand for grassland production insurance factoring in substitution with self-insurance and taking into account successive risks.

The purpose of this paper is to examine factors affecting the use of forage index insurance. Forage is a difficult crop to insure, and index insurance may be well suited for forage insurance and has been implemented in several countries, including Canada, the USA and France. Despite being a promising risk management tool, forage index insurance participation rates in Canada, and other countries are low relative to crop insurance participation rates for grain and oilseed producers.

A survey was conducted with 87 beef and cattle producers from Alberta and Saskatchewan, Canada. A probit regression model was used, and a number of variables were included to examine the use of forage index insurance.

In total, 6 of 11 variables in the model are found to be statistically significant in explaining forage producers’ use of forage index insurance. Results suggest that producers who maintain lower feed reserves are more likely to purchase forage index insurance. Also, producers with higher levels of knowledge of crop insurance and a more positive attitude toward forage insurance are more likely to use forage index insurance. Furthermore, producers are more likely to use forage index insurance if they perceive drought and weather risk as being of greater importance, and if they are younger. The importance of the variable forage index insurance premium price was statistically insignificant. This could be due to the effect of subsidization, reducing the importance of price for the decision to purchase. Similarly, the use of other subsidized risk management policies, including a whole-farm margin policy (e.g. the government program and AgriStability), did not reduce forage index insurance use. A possible explanation for this is that the subsidization of the policies may make it profitable to purchase both, despite the overlapping coverage.

These results may be useful for policy makers interested in increasing forage index insurance participation rates, as forage index insurance participation rates have historically been low relative to grain and oilseed producers.

This study is believed to be one of the first studies regarding the use of forage index insurance by forage producers. Producers can be exposed to catastrophic risks such as drought or other extreme weather events, and forage index insurance may be an effective means to manage these risks. Index insurance determines payments using an index that is correlated to producers’ actual yields. A downside of this method is basis risk, which is the mismatch between the insured index and the producer’s actual yield. Research has focused on basis risk and developing improved methods to reduce basis risk. However, less research has investigated the other important factors that may contribute to forage index insurance use. Producers may have a different risk management environment regarding forage production compared to other farm activities, and these differences have largely not been examined.

The purpose of this paper is to analyse the association between farm/farmer characteristics and unsubsidized farm insurance premium expenditure in Ireland. The distribution of farm insurance expenditures is wide, and it is important to understand the extent to which individual factors influence demand for different levels of insurance premium.

The quantile regression approach and farm accountancy data from the Teagasc National Farm Survey are used to model the association between farm/farmer characteristics and farm insurance demand in Ireland.

Asset values (livestock, buildings and machinery) are positively associated with total insurance expenditure. Both forestry area and crop area are significantly associated with farm insurance expenditure with a stronger influence on the middle and upper part of the distribution. The interaction between farm income and farmer age is positively associated with insurance expenditure pointing to the importance of farm income protection.

The research is mainly concerned with insuring against substantive risks, which are capable of threatening the asset base and continuation of the farm business. Future research can integrate questions in relation to farm safety and farmer health with research on the economic survival of the farm business.

Farmers in Ireland adopt unsubsidized farm insurance as a risk management tool. This situation is relevant to other EU member states including Belgium, Denmark, Germany and Sweden. The findings can be used to inform stakeholders and policymakers about the relative impact of different factors on insurance expenditure.

Previous research has typically focused on the linear relationship between farm/farmer characteristics and insurance demand without accounting for variability across the size distribution. This research is based on the quantile regression approach where the association between farm/farmer characteristics and farm insurance expenditure can be assessed at different points of the distribution.

After several reforms of the common agricultural policy, domestic product prices and farm incomes have become more volatile in the EU. Risk-averse farmers are therefore seeking income stabilizing measures. Margin insurance is among the feasible options but is not yet established in the EU. The purpose of this paper is to explore such an insurance under EU conditions for a major crop.

The paper explores conditions for a viable margin insurance. It presents a modeled-loss trigger for a margin insurance scheme using wheat production in Austria as the case study.

While margin insurance products are widely used in the USA, such products are not available in the EU. Basis risk seems to be an important reason. An exploration of wheat production in Austria shows that heterogeneity among farms is relevant. The authors demonstrate an approach aiming to lower basis risks.

This paper presents a technically feasible approach to handle the basis risk of a margin insurance under EU conditions. Before such a product can be placed on the market, further research on systemic risk is needed. Market research is necessary to fine-tune the details of the product to meet the actual demand of farmers. Further empirical validation of the modeled losses is needed. Legal implications are not explored in this paper.

The insurance product presented here demonstrates a concept that is established in the USA under EU conditions. It is motivated by several shortcomings of income risk mitigation approaches in the EU.

Income risk may be seen as a problem of social policy. The approach shows that it can be addressed by market-oriented instruments.

To the authors’ knowledge, this paper is the first to propose a tool to handle basis risk for margin insurance products in agriculture in the EU. A special feature of the proposed approach is that it is not limited to a single product such as wheat.

Index insurance is promising to mitigate drought-related income losses in agriculture. To reduce the basis risk of index insurance, the integration of satellite data is of growing interest in research. The objective of this study is to obtain preliminary evidence regarding farmers' perceived usefulness (PU) of satellite-based index insurance.

By modifying the transtheoretical model of change to a transtheoretical model of PU, German farmers' gradual PU of satellite-based index insurance was investigated.

The results show that the average farmer perceives satellite-based index insurance as useful. It can be particularly seen that a higher level of education in an agricultural context as well as higher trust in index insurance products increases farmers' gradual PU. Moreover, higher relative weather-related income losses increase farmers' gradual PU.

It is recommended to apply latent variables when conducting future investigations regarding farmers' PU.

To the best of the authors' knowledge, this is the first study to explore farmers' PU of upcoming satellite-based index insurance by modifying and applying the transtheoretical model in a new way.

The purpose of the present paper is to review studies on weather index-insurance as a tool to manage the climate change impact risk on farmers and to explore the study gaps in the currently existing literature by using a systematic literature review.

This study analyzed and reviewed the 374 articles on weather index insurance (WII) based on a systematic literature search on Web of Science and Scopus databases by using the systematic literature review method.

WII studies shifted their focus on growing and emerging areas of climate change impact risk. The finding shows that the impact of climate change risk significantly influenced the viability of WII in terms of pricing and design of WII. Therefore, the cost of WII premium increases due to the uncertainty of climate change impact that enhances the probability of losses related to insured weather risks. However, WII has emerged as a risk management tool of climate insurance for vulnerable agrarian communities. The efficacy of WII has been significantly influenced by repetitive environmental disasters and climate change phenomena.

This study will be valuable for scholars to recognize the missing and emerging themes in WII.

This study will help the policy planners to understand the influence of climate change impact on WII viability.

This study is the original work of the author. An attempt has been made in the present study to systematically examine the viability of WII for insuring the climate change risk.

China has embarked on a major concerted strategy to arrest grassland degradation and livelihood problems in the western pastoral region. The paper aims to provide a framework through which this strategy can be understood and refined into the future.

The paper is based on a typology of grassland policies – technical, administrative, and management – and a discussion of the emphasis that China has and should place on each policy category. Data are drawn from policy documents and interview material collected through extensive fieldwork in large tracts of China's western pastoral region.

China has appropriately pursued “top‐down” technical and administrative policies to address major and immediate degradation‐livelihoods problems. However, longer term solutions to the problems require the strengthening of management structures from the “bottom‐up”, especially amongst herders themselves and other economic factors.

The paper proposes a series of concrete recommendations that may be considered as China refines its grasslands strategy into the future. The emphasis in the paper on the relationships between multi‐dimensional policies is of particular value in addressing multi‐dimensional grasslands‐livelihood problems.

Despite the magnitude and implications of China's recent grasslands strategy, there is a dearth of English language studies on the subject, which this paper aims to fill. The paper includes numerous micro‐level insights gained from extensive fieldwork in the western pastoral region that are not evident in more macro‐level studies.

Based on the Normalized Difference Vegetation Index (NDVI)-based insurance developed by the Ministry of Agriculture, Livestock and Fisheries of Argentina (MAGyP) with technical assistance of the World Bank (WB), the purpose of this paper is to evaluate the out-of-sample performance of the NDVI-based insurance in Bahía Blanca Department of the south west of Buenos Aires (SWBA) Province in Argentina, by calculating the technical premium with the methodology developed by MAGyP-WB and NDVI information up to 2007, and analyzing the results that would have been obtained in 2008 and 2009.

With the available NDVI information (1982-2009), the authors uses the out-of-sample method to analyze the rating of the contract and the reasonability of the premium payment through a comparison of the frequency and severity of payouts in the NDVI coverage with the losses suffered by droughts in SWBA. Specifically, it has been taken the data until 2006 to set the Triggers and Exits values and to calculate the premium rates, and the payout and loss ratio in 2007 was then analyzed. A similar analysis was done for years 2007-2008 and 2008-2009.

According with the rating methodology described in this paper, payouts determined by the NDVI-based insurance fit with falls in forage production and reduced meat production yields, which confers reasonability to this tool as a coverage option for cattle and fodder producers. Definite technical premiums based on 1982-2007 period, capture the occurrence of severe drought events, defining a risk profile that is consistent with the used information. Adding more observations to the sample, this profile is redefined, showing the sensitivity of the results to the quality and quantity of data used in the analysis.

There is a subjective assessment in the determination of the sample and the weighting of this information. The election of the period to be considered, how to incorporate the changes in the patterns of climate behavior in the medium- and long-term and the expected effects in the NDVI, etc. will impact on the values of resulting technical premiums. In the specific case of this analysis, the fact of not having considered in the sample two extreme years (2008 and 2009) has a concrete implication in the obtained premiums. In this paper, only the Bahía Blanca Department was considered. Rainfall pattern and extensive grazing of natural grassland in the SWBA area might vary from Department to Department, so the results and payouts might change according to these circumstances.

The situation shown in the findings could be seen as an underestimation of the risk to which the producer is exposed and should be taken into account for further researches and insurance products to be designed. When the considered data series shows atypical or extreme values and these are incorporated into the sample, significant changes can be registered in the triggers and premiums.

This paper analyzes how a risk profile is redefined depending on the sample considered and shows the sensitivity of the results to used data when using index-based insurance.

Conceptualizing development in terms of risk management has become a prominent feature of mainstream development discourse. This has led to a convergence between the rubrics of financial inclusion and risk management whereby improved access for poor households to private sector credit, insurance and savings products is represented as a necessary step toward building “resilience.” This convergence, however, is notable for a shallow understanding of the production and distribution of risks. By naturalizing risk as an inevitable product of complex systems, the approach fails to interrogate how risk is produced and displaced unevenly between social groups. Ignoring the structural and relational dimensions of risk production leads to an overly technical approach to risk management that is willfully blind to the intersection of risk and social power. A case study of the promotion of index-based livestock insurance in Mongolia – held as a model for innovative risk management via financial inclusion – is used to indicate the tensions and contradictions of this projected synthesis of development and risk management.

The purpose of this study is to examine the effects of agricultural policy reform – specifically the change from market to direct payment support – on income variability of Swiss farming households. In addition, the observed heterogeneity in income risks across farms and time is explained in terms of farm and regional characteristics.

Unbalanced farm‐level panel data of the Swiss farm accountancy network (FADN) are used to construct coefficients of variation of five‐year overlapping time intervals for total household income and gross farm revenues over the period 1992 to 2009. Linear fixed effect models are applied to measure the effect of specialization, off‐farm income, direct payments, farm size, and liquidity on the variability of gross farm revenues and household income in the valley, hill, and mountain regions.

The switch from market‐based support to direct payments has decreased the variability of farm revenues and household income. The strong reliance on direct payments serves as insurance for most farmers and reduces both household income and revenue risk. Off‐farm income can be used by farmers to reduce household income risk but it increases revenue risk in the valley regions. In all of the regions considered, farm size has a positive effect on household income risk and a negative effect on revenue risk. A high degree of specialization increases both gross revenue and household income risk. Potential revenue insurance contracts should specify farmers' off‐farm employment, the degree of specialization, farm size, and regional specific risk profiles.

This paper assesses the complementary effects of specific farm characteristics and risk management strategies with regard to both farm revenue and household income risk. Influences of agricultural policy changes on income risks are also empirically assessed at different spatial scales.