Systemic Weather Risk and Crop Insurance: The Case of China

Research output: Contribution to journalResearch articleContributedpeer-review

Contributors

  • Ostap Okhrin - , Humboldt University of Berlin (Author)
  • Martin Odening - , Humboldt University of Berlin (Author)
  • Wei Xu - , Agr Unit SCOR Global P&C SE Reinsurance (Author)

Abstract

This article explores the possibility of spatial diversification of weather risk for 17 agricultural production regions in China. We investigate the relation between the size of the buffer load and the size of the trading area of a hypothetical temperature-based insurance. The analysis adopts the hierarchical Archimedean copula approach that allows for flexible modeling of the dependence structure of insured losses. We find that the spatial diversification effect depends on the type of the weather index and the strike level of the insurance. Our findings are relevant for the current discussion on the viability of private crop insurance in China.

Details

Original languageEnglish
Pages (from-to)351-372
Number of pages22
JournalThe journal of risk & insurance
Volume80
Issue number2
Publication statusPublished - Jun 2013
Peer-reviewedYes
Externally publishedYes

External IDs

Scopus 84878174476
WOS 000319288300005
ORCID /0000-0002-8909-4861/work/149081775

Keywords

Sustainable Development Goals

Keywords

  • Copulas, Market