Efficiency of Weather Derivatives as Primary Crop Insurance Instruments

This study analyzes efficiency of weather derivatives as primary insurance instruments for six crop reporting districts that are among the largest producers of corn, cotton, and soybeans in the United States. Specific weather derivatives are constructed for each crop/district combination based on analysis of several econometric models. The performance of the designed weather derivatives is then analyzed both in- and out-of-sample. The primary findings suggest that the optimal structure of weather derivatives varies widely across crops and regions, as does the risk-reducing performance of the optimally designed weather derivatives. Further, optimal weather derivatives required rather complicated combinations of weather variables to achieve reasonable fits between weather and yield.agricultural risk management, crop insurance, index insurance, weather derivatives, Risk and Uncertainty,

Advanced optimal extraction for the Spitzer/IRS

We present new advances in the spectral extraction of point-like sources adapted to the Infrared Spectrograph onboard the Spitzer Space Telescope. For the first time, we created a super-sampled point spread function of the low-resolution modules. We describe how to use the point spread function to perform optimal extraction of a single source and of multiple sources within the slit. We also examine the case of the optimal extraction of one or several sources with a complex background. The new algorithms are gathered in a plugin called Adopt which is part of the SMART data analysis software.Comment: Accepted for publication in PAS

TESTING THE VIABILITY OF AREA YIELD INSURANCE FOR COTTON AND SOYBEANS IN THE SOUTHEAST

GRP is essentially a put option on the NASS estimate of the county average yield. Purchasers of GRP are exposed to geographic basis risk. This study uses farm- and county-level yield data to examine the viability of area yield insurance for cotton and soybean farms in the southeastern U.S.Risk and Uncertainty,

Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton

This article makes an initial attempt to design catastrophe (CAT) bond products for agriculture and examines the potential of these instruments as mechanisms for transferring agricultural risks from insurance companies to investors/speculators in the global capital market. The case of Georgia cotton is considered as a specific example. The CAT bond contracts are based on percentage deviations of realized state average yields relative to the long-run average. The contracts are priced using historical state-level cotton yield data. The principal finding of the study is that the proposed CAT bonds demonstrate potential as risk transfer mechanisms for crop insurance companies.CAT bonds, catastrophe bond pricing, catastrophe insurance, disaster risk, reinsurance, risk securitization, Risk and Uncertainty,

THI APPLICATION TO INSURING AGAINST HEAT STRESS IN DAIRY COWS

Heat stress is associated with reduced milk production in dairy cows. Insurance instruments based on an index of ambient temperature and relative humidity measured at Macon, Georgia and Tallahassee, Florida are shown to reduce net revenue risk for a representative farm in south-central Georgia.Risk and Uncertainty,

Impacts of government risk management policies on hedging in futures and options:LPM2 hedge model vs. EU hedge model

The main objective of this study is to compare the impacts of government payments and crop insurance policies on the use of futures and options measured from a downside risk hedge model with the impacts analyzed by the expected utility (EU) hedge model. Understanding the effects of government-provided risk management tools on the private market risk management tools, such as futures and options, provides value to both crop farmers and policy makers. Comparison of the impacts from the two hedge models shows that crop farmer will hedge less in futures under the LPM2 model than under the EU hedge model. This finding indicates that model misspecification is another reason for the phenomenon that farmers actually hedge less in futures than predicted by the EU model. From the perspective of exploring new research techniques, this study applied two relatively new simulation concepts, copula simulation and conditional kernel density approach, to make the simulation assumptions less restrictive and more consistent with observations. The copula simulation applied in this study allows yield and price to have more flexible joint distribution functions than multivariate normal; the conditional kernel density approach used in farm yield simulation enables the variance of farm yield varies with county yield rather than being constant.Down-side Risk, LPM2 Hedge Model, Government Payments, Crop Insurance Policies, Copula Simulation, Conditional Kernel Density, Agricultural Finance,

Functional Outcomes of the Low Vision Depression Prevention Trial in Age-Related Macular Degeneration.

Purpose: To compare the efficacy of behavioral activation (BA) plus low vision rehabilitation with an occupational therapist (OT-LVR) with supportive therapy (ST) on visual function in patients with age-related macular degeneration (AMD). Methods: Single-masked, attention-controlled, randomized clinical trial with AMD patients with subsyndromal depressive symptoms (n = 188). All subjects had two outpatient low vision rehabilitation optometry visits, then were randomized to in-home BA + OT-LVR or ST. Behavioral activation is a structured behavioral treatment aiming to increase adaptive behaviors and achieve valued goals. Supportive therapy is a nondirective, psychological treatment that provides emotional support and controls for attention. Functional vision was assessed with the activity inventory (AI) in which participants rate the difficulty level of goals and corresponding tasks. Participants were assessed at baseline and 4 months. Results: Improvements in functional vision measures were seen in both the BA + OT-LVR and ST groups at the goal level (d = 0.71; d = 0.56 respectively). At the task level, BA + OT-LVR patients showed more improvement in reading, inside-the-home tasks and outside-the-home tasks, when compared to ST patients. The greatest effects were seen in the BA + OT-LVR group in subjects with a visual acuity ≥20/70 (d = 0.360 reading; d = 0.500 inside the home; d = 0.468 outside the home). Conclusions: Based on the trends of the AI data, we suggest that BA + OT-LVR services, provided by an OT in the patient\u27s home following conventional low vision optometry services, are more effective than conventional optometric low vision services alone for those with mild visual impairment. (ClinicalTrials.gov number, NCT00769015.)

Hedging Downside Risk to Farm Income with Futures and Options: Effects of Government Payment Programs and Federal Crop Insurance Plans

The high proportion of government payments in total crop farm income and the purchase of subsidized crop insurance have changed the income distribution of U.S. crop farmers. As a result, the risk management behaviors of U.S. crop farmers are affected by these programs in terms of the use of private market risk management tools, such as futures and options. The objective of this research is to investigate the effects of the government payments and federal crop insurance policies on the usage of futures and options by crop farmers from a downside risk management perspective. Results in this study suggest that both yield insurance and revenue insurance creates more hedging demands for futures. But revenue insurance decreases the buying of put options at the same time. Loan deficiency government payments substitutes largely for the hedging role of put options while Counter Cyclical payments substitutes futures hedge. This research contributes the literature by proposing to use a downside risk hedge model, the second-order lower partial moment (LPM2) hedge model, to investigate the interaction of government and private risk management tools used by crop farmers. This study also initiatively applies the conditional kernel density method and the copula approach in the data simulation process. The conditional kernel density method generates county yield and farm yield with the same conditional pattern as revealed in the historical yields. The copula simulation allows the crop yield and prices have more flexible joint distributions other than bivariate normal.Agricultural and Food Policy, Agricultural Finance,

Pilot study and evaluation of a SMMR-derived sea ice data base

Data derived from the Nimbus 7 scanning multichannel microwave radiometer (SMMR) are discussed and the types of problems users have with satellite data are documented. The development of software for assessing the SMMR data is mentioned. Two case studies were conducted to verify the SMMR-derived sea ice concentrations and multi-year ice fractions. The results of a survey of potential users of SMMR data are presented, along with SMMR-derived sea ice concentration and multiyear ice fraction maps. The interaction of the Arctic atmosphere with the ice was studied using the Nimbus 7 SMMR. In addition, the characteristics of ice in the Arctic ocean were determined from SMMR data