Modeling Texas Dryland Cotton Yields, With Application to Crop Insurance Actuarial Rating

Texas dryland upland cotton yields have historically exhibited greater variation and more distributional irregularities than the yields of other crops, raising concerns that conventional parametric distribution models may generate biased or otherwise inaccurate crop insurance premium rate estimates. Here, we formulate and estimate regime-switching models for Texas dryland cotton yields in which the distribution of yield is conditioned on local drought conditions. Our results indicate that drought-conditioned regime-switching models provide a better fit to Texas county-level dryland cotton yields than conventional parametric distribution models. They do not, however, generate significantly different Group Risk Plan crop insurance premium rate estimates.


Issue Date:
2008-04
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/45522
Published in:
Journal of Agricultural and Applied Economics, Volume 40, Number 1
Page range:
239-252
Total Pages:
14
JEL Codes:
Q10; Q14; Q18
Series Statement:
JAAE




 Record created 2017-04-01, last modified 2017-08-25

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)