Predicting the yield of spring wheat by weather indices in Finland: implications for designing weather index insurances
Year: 2011
Type: article
Abstract: This paper quantifies the spring wheat yield conditional on temperature- and rainfall-based weather indices in Finland. The estimating equations are standardized and simplified so that they provide information for designing tradable contracts. A simple basket of weather indices, consisting of growing degree days, night frost and rainfall measures, has the potential to hedge about 38% of the wheat grower yield risk, with the remaining 62% being left as uninsured basis risk. Our results have several important implications for the design of simple and tractable weather index-based insurance contracts. The data suggest that the marginal products of weather events have a large variation across time and they are the most significant within certain critical time periods. Therefore, the weather events triggering the indemnity payments should be bounded within certain critical time regimes over their distribution along the growing season.;
Source: Agricultural and Food Science
DOI: 10.23986/afsci.6024
Authors: K. PIETOLA, S. MYYRÄ, L. JAUHIAINEN
Institution: Agrifood Research Finland
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
SDG: Zero hunger
Open Access status: diamond
OpenAlex ID: W2135248545