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The Economics Of Insuring Crops Against Drought

Author

Listed:
  • Bardsley, Peter
  • Abey, Arun
  • Davenport, Scott V.

Abstract

The necessary conditions for the existence of a financially viable crop insurance scheme against drought are examined. A supply and demand model for crop insurance is developed which identifies the parameters that are critical to the efficiency of such a scheme. The values of these parameters are estimated by using data from the Australian wheat industry. It is found that crop insurance against drought would appear to be unattractive from an efficiency point of view.

Suggested Citation

  • Bardsley, Peter & Abey, Arun & Davenport, Scott V., 1984. "The Economics Of Insuring Crops Against Drought," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 28(1), pages 1-14, April.
    • Handle: RePEc:ags:ajaeau:22590
    DOI: 10.22004/ag.econ.22590
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    References listed on IDEAS

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    1. John C. Quiggin & Jock R. Anderson, 1979. "Stabilisation And Risk Reduction In Australian Agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 23(3), pages 191-206, December.
    2. John W. Freebairn, 1978. "Pros And Cons Of Temporary Industry Assistance," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 22(2-3), pages 194-205, 08-12.
    3. Peter J. Barry & C. B. Baker, 1971. "Reservation Prices on Credit Use: A Measure of Response to Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(2), pages 222-227.
    4. Prescott, Edward C & Townsend, Robert M, 1984. "Pareto Optima and Competitive Equilibria with Adverse Selection and Moral Hazard," Econometrica, Econometric Society, vol. 52(1), pages 21-45, January.
    5. Mark V. Pauly, 1974. "Overinsurance and Public Provision of Insurance: The Roles of Moral Hazard and Adverse Selection," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 88(1), pages 44-62.
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    Keywords

    Risk and Uncertainty;

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