7 research outputs found
Managing Irrigation Risk with Inflow-Based Derivatives: The Case of Rio Mayo Irrigation District in Sonora, Mexico
Uncertain reservoir inflows represent a major source of risk for irrigated agriculture. A derivative instrument that uses reservoir inflows as the underlying variable is designed and tested with a recursive stochastic simulation of the Rio Mayo irrigations system. The results indicate that the instrument effectively protects against downside risk.Risk and Uncertainty,
An Empirical Evaluation of Irrigation Insurance for Agricultural Systems in the Mexican Northwest
Prototype inflow-based derivative contracts are designed to hedge irrigation risk in the Rio Mayo Valley of Sonora, Mexico. The results indicate that an 18-month contract is feasible given the specific characteristics of the region selected for the study.Risk and Uncertainty,
Modeling Exit and Entry of Farmers in a Crop Insurance Program
This paper examines the factors influencing farmer participation in crop insurance schemes, but unlike previous studies that focus on total demand, participation is disaggregated into entrants and those exiting. Modeling entry and exit decisions separately illustrates that the effect of a given variable is often muted by aggregation. In addition, the approach in this paper distinguishes between price and yield variables rather than total returns and is consequently able to demonstrate that price variables are particularly important for farmers considering enrolling in crop insurance, while yield variables and other risk management opportunities are more important for farmers who have been in the program but are deciding to exit. The result suggests that moral hazard is reduced significantly by calculating the coverage yield level for an individual producer on the basis of a moving average of past yields for that farmer. While yield and its variance are particularly influential in the participation decision for farmers currently enrolled, its significant impact on the insurance decision for all farmers highlights the importance of crop insurance as a potential adaptation strategy to weather events.crop insurance, entry and exit, panel data, Risk and Uncertainty,
Managing Irrigation Risk with Inflow-Based Derivatives: The Case of Rio Mayo Irrigation District in Sonora, Mexico
Uncertain reservoir inflows represent a major source of risk for irrigated agriculture. A derivative instrument that uses reservoir inflows as the underlying variable is designed and tested with a recursive stochastic simulation of the Rio Mayo irrigations system. The results indicate that the instrument effectively protects against downside risk
Using Irrigation Insurance to Improve Water Usage of the Rio Mayo Irrigation System in Northwestern Mexico
Summary In many regions of the world, the timing between rainfall and the cropping season does not coincide creating the necessity for managing water resources. Although reservoirs and irrigation systems can usually guarantee needed water supplies for peak cropping periods within a single crop year, their risk-reducing effectiveness over a period of years can be diminished by annual rainfall and climate variables. The authors investigate a financial instrument based on river flow accumulations--irrigation insurance--to address drought-induced income shocks and water allocation problems. A stochastic simulation based on economic and hydrological characteristics of the Rio Mayo irrigation system in northwestern Mexico is used to study the concept.drought risk irrigation insurance water use developing country Mexico Latin America
An Empirical Evaluation of Irrigation Insurance for Agricultural Systems in the Mexican Northwest
Prototype inflow-based derivative contracts are designed to hedge irrigation risk in the Rio Mayo Valley of Sonora, Mexico. The results indicate that an 18-month contract is feasible given the specific characteristics of the region selected for the study
Modeling Exit and Entry of Farmers in a Crop Insurance Program
This paper examines the factors influencing farmer participation in crop insurance schemes,
but unlike previous studies that focus on total demand, participation is disaggregated into entrants
and those exiting. Modeling entry and exit decisions separately illustrates that the effect
of a given variable is often muted by aggregation. In addition, the approach in this paper distinguishes
between price and yield variables rather than total returns and is consequently able
to demonstrate that price variables are particularly important for farmers considering enrolling
in crop insurance, while yield variables and other risk management opportunities are more important
for farmers who have been in the program but are deciding to exit. The result suggests
that moral hazard is reduced significantly by calculating the coverage yield level for an individual
producer on the basis of a moving average of past yields for that farmer. While yield
and its variance are particularly influential in the participation decision for farmers currently
enrolled, its significant impact on the insurance decision for all farmers highlights the importance
of crop insurance as a potential adaptation strategy to weather events