ZONE-BASED GROUP RISK INSURANCE

Current country-based group crop insurance, i.e., Group Risk Plan (GRP), is not an effective risk-reducing tool in counties where natural conditions are different across the area. Using only the historical yield information, a statistical approach is developed to group farmers by their yield similarity rather than linking them based on their association with a particular county. The cases of Washington State wheat farms and Iowa corn farms are the focus of this investigation. Sub-county or cross-county zones (clusters) are identified, and each farm is classified into a cluster where individual farm identification remains unknown. To improve risk-management and cost effectiveness of the crop insurance instrument, we propose implementation of zone-based GRP as a substitute for county-based GRP, where homogeneous zones rather than county boundaries are used for indemnifying yield.


Issue Date:
2000-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/30904
Published in:
Journal of Agricultural and Resource Economics, Volume 25, Number 2
Page range:
411-431
Total Pages:
21




 Record created 2017-04-01, last modified 2017-04-04

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