Publication Date:
2016-08-20
Description:
A multi-year drought has taken a severe toll on the agricultural economy of California’s Central Valley. Index insurance is an instrument with the potential to protect water users from economic losses due to periodic water shortages. An index insurance product based on the Sacramento Index and adapted to the Central Valley Project water supply is proposed. To address the potential for intertemporal adverse selection, three product designs are suggested: (1) "early bird" insurance; (2) variable premium insurance; and (3) variable deductible insurance. The performance of the designs are assessed using loss functions from the Westlands Water District in the San Joaquin Valley.
Keywords:
Q14 - Agricultural Finance, Q15 - Land Ownership and Tenure
;
Land Reform
;
Land Use
;
Irrigation, Q54 - Climate
;
Natural Disasters
;
Global Warming
Print ISSN:
2040-5790
Electronic ISSN:
2040-5804
Topics:
Agriculture, Forestry, Horticulture, Fishery, Domestic Science, Nutrition
,
Economics
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