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Natural insurance as condition for market insurance: Climate change adaptation in agriculture

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  • Jørgensen, Sisse Liv
  • Termansen, Mette
  • Pascual, Unai

Abstract

This paper focuses on the potential use of insurance as a climate change adaptation mechanism in agriculture. We analyse the attractiveness of a climate risk insurance scheme and the choices farmers face between adaptation via farm management practices and purchase of crop insurance in the market. A choice experiment is used to reveal Danish farmers’ preferences regarding an insurance contract where adoption of land management practices to improve soil sustainability is conditional for obtaining insurance cover in the market. Results indicate that in general arable farmers and farmers with low soil quality who have experienced crop damages in the past are more likely to purchase such conditional insurance. Farmers with good quality soils, who perceive that they have already adapted their practices to climatic risks and who have not experienced losses due to adverse climatic events in the past are less willing to purchase insurance. The paper contributes to the limited knowledge on preferences for climate risk related insurance in agricultural systems in general, and in Europe in particular.

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  • Jørgensen, Sisse Liv & Termansen, Mette & Pascual, Unai, 2020. "Natural insurance as condition for market insurance: Climate change adaptation in agriculture," Ecological Economics, Elsevier, vol. 169(C).
    • Handle: RePEc:eee:ecolec:v:169:y:2020:i:c:s0921800919301612
    DOI: 10.1016/j.ecolecon.2019.106489
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    Cited by:

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    2. Feng Kong, 2021. "How to Understand the Role of Insurance Mechanism in a Global Pandemic?," IJERPH, MDPI, vol. 18(13), pages 1-11, June.
    3. Zandersen, Marianne & Oddershede, Jakob Stoktoft & Pedersen, Anders Branth & Nielsen, Helle Ørsted & Termansen, Mette, 2021. "Nature Based Solutions for Climate Adaptation - Paying Farmers for Flood Control," Ecological Economics, Elsevier, vol. 179(C).
    4. Christoph Schulze & Katarzyna Zagórska & Kati Häfner & Olimpia Markiewicz & Mikołaj Czajkowski & Bettina Matzdorf, 2024. "Using farmers' ex ante preferences to design agri‐environmental contracts: A systematic review," Journal of Agricultural Economics, Wiley Blackwell, vol. 75(1), pages 44-83, February.
    5. Hahn, Thomas & Sioen, Giles B. & Gasparatos, Alexandros & Elmqvist, Thomas & Brondizio, Eduardo & Gómez-Baggethun, Erik & Folke, Carl & Setiawati, Martiwi Diah & Atmaja, Tri & Arini, Enggar Yustisi & , 2023. "Insurance value of biodiversity in the Anthropocene is the full resilience value," Ecological Economics, Elsevier, vol. 208(C).
    6. Sitong Yang & Shouwei Li & Xue Rui & Tianxiang Zhao, 2024. "The impact of climate risk on the asset side and liability side of the insurance industry: evidence from China," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-51, June.
    7. Lan Mu & Johannus Janmaat & Joanne Taylor & Lauren Arnold, 2023. "Attitudes and opportunities: comparing climate change adaptation intentions and decisions of agricultural producers in Shaanxi, China, and British Columbia, Canada," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(1), pages 1-27, January.
    8. Chunhua Tang & Huiyuan Zhang & Jiamuyan Xie, 2022. "Optimal Contract Design in Contract Farming under Asymmetric Effort Information," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    9. Ruikun Peng & Yinyin Zhao & Ehsan Elahi & Benhong Peng, 2021. "Does disaster shocks affect farmers’ willingness for insurance? Mediating effect of risk perception and survey data from risk-prone areas in East China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 106(3), pages 2883-2899, April.
    10. Cécile Aubert & Yann Raineau & Marc Raynal & Nicolas Pasquier, 2024. "Multiple agricultural risks and insurance—issues, perspectives, and illustration for wine-growing," Post-Print hal-04732725, HAL.
    11. Litao Feng & Wei Liu & Zhihui Zhao & Yining Wang, 2023. "Rainfall fluctuations and rural poverty: Evidence from Chinese county‐level data," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(3), pages 633-656, July.
    12. Feng Kong & Shao Sun, 2021. "Better Understanding Insurance Mechanism in Dealing with Climate Change Risk, with Special Reference to China," IJERPH, MDPI, vol. 18(6), pages 1-14, March.

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