Improving Index-Based Drought Insurance in Varying Topography: Evaluating Basis Risk Based on Perceptions of Nicaraguan Hillside Farmers

This paper discusses a methodology to model precipitation indices and premium prices for index-based drought insurance for smallholders. Spatial basis risk, which is borne by the insured, is a problem, especially in variable topography. Also, site-specific drought risk needs to be estimated accurate...

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Detalles Bibliográficos
Autores principales: Kost, André, Läderach, Peter, Fisher, Myles, Cook, Simon, Gómez, Lorena
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Public Library of Science 2012
Materias:
Research Article
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3519887/
https://www.ncbi.nlm.nih.gov/pubmed/23240020
http://dx.doi.org/10.1371/journal.pone.0051412
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author Kost, André
Läderach, Peter
Fisher, Myles
Cook, Simon
Gómez, Lorena
author_facet Kost, André
Läderach, Peter
Fisher, Myles
Cook, Simon
Gómez, Lorena
author_sort Kost, André
collection PubMed
description This paper discusses a methodology to model precipitation indices and premium prices for index-based drought insurance for smallholders. Spatial basis risk, which is borne by the insured, is a problem, especially in variable topography. Also, site-specific drought risk needs to be estimated accurately in order to offer effective insurance cover and ensure financial sustainability of the insurance scheme. We explore farmers' perceptions on drought and spatial climate variability and draw conclusions concerning basis risk with regards to the proposed methodology. There are technically many options to represent natural heterogeneity in index insurance contracts while serving the customer adequately and keeping transaction costs low.
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spelling pubmed-35198872012-12-13 Improving Index-Based Drought Insurance in Varying Topography: Evaluating Basis Risk Based on Perceptions of Nicaraguan Hillside Farmers Kost, André Läderach, Peter Fisher, Myles Cook, Simon Gómez, Lorena PLoS One Research Article This paper discusses a methodology to model precipitation indices and premium prices for index-based drought insurance for smallholders. Spatial basis risk, which is borne by the insured, is a problem, especially in variable topography. Also, site-specific drought risk needs to be estimated accurately in order to offer effective insurance cover and ensure financial sustainability of the insurance scheme. We explore farmers' perceptions on drought and spatial climate variability and draw conclusions concerning basis risk with regards to the proposed methodology. There are technically many options to represent natural heterogeneity in index insurance contracts while serving the customer adequately and keeping transaction costs low. Public Library of Science 2012-12-11 /pmc/articles/PMC3519887/ /pubmed/23240020 http://dx.doi.org/10.1371/journal.pone.0051412 Text en © 2012 Kost et al http://creativecommons.org/licenses/by/4.0/ This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are properly credited.
spellingShingle Research Article
Kost, André
Läderach, Peter
Fisher, Myles
Cook, Simon
Gómez, Lorena
Improving Index-Based Drought Insurance in Varying Topography: Evaluating Basis Risk Based on Perceptions of Nicaraguan Hillside Farmers
title Improving Index-Based Drought Insurance in Varying Topography: Evaluating Basis Risk Based on Perceptions of Nicaraguan Hillside Farmers
title_full Improving Index-Based Drought Insurance in Varying Topography: Evaluating Basis Risk Based on Perceptions of Nicaraguan Hillside Farmers
title_fullStr Improving Index-Based Drought Insurance in Varying Topography: Evaluating Basis Risk Based on Perceptions of Nicaraguan Hillside Farmers
title_full_unstemmed Improving Index-Based Drought Insurance in Varying Topography: Evaluating Basis Risk Based on Perceptions of Nicaraguan Hillside Farmers
title_short Improving Index-Based Drought Insurance in Varying Topography: Evaluating Basis Risk Based on Perceptions of Nicaraguan Hillside Farmers
title_sort improving index-based drought insurance in varying topography: evaluating basis risk based on perceptions of nicaraguan hillside farmers
topic Research Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3519887/
https://www.ncbi.nlm.nih.gov/pubmed/23240020
http://dx.doi.org/10.1371/journal.pone.0051412
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