Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay
This paper develops a novel methodology to estimate the degree of spatial basis risk for an arbitrary rainfall index insurance instrument. It relies on a widelyused stochastic rainfall generator, extendedto accommodate nontraditional dependence patterns—in particular spatial upper-tail dependence in...
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| Format: | Artículo preliminar |
| Language: | Inglés |
| Published: |
International Food Policy Research Institute
2016
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| Online Access: | https://hdl.handle.net/10568/147562 |
| _version_ | 1855519382789160960 |
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| author | Ceballos, Francisco |
| author_browse | Ceballos, Francisco |
| author_facet | Ceballos, Francisco |
| author_sort | Ceballos, Francisco |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | This paper develops a novel methodology to estimate the degree of spatial basis risk for an arbitrary rainfall index insurance instrument. It relies on a widelyused stochastic rainfall generator, extendedto accommodate nontraditional dependence patterns—in particular spatial upper-tail dependence in rainfall—through a copula function. The methodology is applied to a recentlylaunched index product insuring against excess rainfall in Uruguay. The model is first calibrated using historical daily rainfall data from the national network of weather stations, complemented with a unique,high-resolution dataset from a dense network of 34 automatic weather stations around the study area. The degree of downside spatial basis risk is then estimated by Monte Carlo simulations and the results are linked to both a theoretical model of the demand for index insurance and to farmers’ perceptions about the product. |
| format | Artículo preliminar |
| id | CGSpace147562 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2016 |
| publishDateRange | 2016 |
| publishDateSort | 2016 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1475622025-11-06T05:39:23Z Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay Ceballos, Francisco insurance rain rainfall precipitation spatial analysis rainfall patterns weather risk This paper develops a novel methodology to estimate the degree of spatial basis risk for an arbitrary rainfall index insurance instrument. It relies on a widelyused stochastic rainfall generator, extendedto accommodate nontraditional dependence patterns—in particular spatial upper-tail dependence in rainfall—through a copula function. The methodology is applied to a recentlylaunched index product insuring against excess rainfall in Uruguay. The model is first calibrated using historical daily rainfall data from the national network of weather stations, complemented with a unique,high-resolution dataset from a dense network of 34 automatic weather stations around the study area. The degree of downside spatial basis risk is then estimated by Monte Carlo simulations and the results are linked to both a theoretical model of the demand for index insurance and to farmers’ perceptions about the product. 2016-12-29 2024-06-21T09:23:02Z 2024-06-21T09:23:02Z Working Paper https://hdl.handle.net/10568/147562 en Open Access application/pdf International Food Policy Research Institute Ceballos, Francisco. 2016. Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay. IFPRI Discussion Paper 1595. Washington, DC: International Food Policy Research Institute (IFPRI). https://hdl.handle.net/10568/147562 |
| spellingShingle | insurance rain rainfall precipitation spatial analysis rainfall patterns weather risk Ceballos, Francisco Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay |
| title | Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay |
| title_full | Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay |
| title_fullStr | Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay |
| title_full_unstemmed | Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay |
| title_short | Estimating spatial basis risk in rainfall index insurance: Methodology and application to excess rainfall insurance in Uruguay |
| title_sort | estimating spatial basis risk in rainfall index insurance methodology and application to excess rainfall insurance in uruguay |
| topic | insurance rain rainfall precipitation spatial analysis rainfall patterns weather risk |
| url | https://hdl.handle.net/10568/147562 |
| work_keys_str_mv | AT ceballosfrancisco estimatingspatialbasisriskinrainfallindexinsurancemethodologyandapplicationtoexcessrainfallinsuranceinuruguay |