IDEAS home Printed from https://ideas.repec.org/p/ags/aaea05/19516.html
   My bibliography  Save this paper

Effects of Private Insurance on Forest Landowners' Incentives to Sequester and Trade Carbon under Uncertainty: Impact of Hurricanes

Author

Listed:
  • Grover, Mansi
  • Bosch, Darrell J.
  • Preisley, Stephen P.

Abstract

We evaluate incentives of forest landowners for sequestering and trading carbon, given the risk of carbon loss from hurricanes, and an opportunity to insure their losses. Results of simulation model reveal that the effect of hurricane risk depends on the variability of returns from carbon and timber and landowners' ability to mitigate risk by diversifying forest holdings across regions or transferring risk by purchasing insurance.

Suggested Citation

  • Grover, Mansi & Bosch, Darrell J. & Preisley, Stephen P., 2005. "Effects of Private Insurance on Forest Landowners' Incentives to Sequester and Trade Carbon under Uncertainty: Impact of Hurricanes," 2005 Annual meeting, July 24-27, Providence, RI 19516, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19516
    DOI: 10.22004/ag.econ.19516
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/19516/files/sp05gr03.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.19516?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    2. Susan Subak, 2003. "Replacing carbon lost from forests: an assessment of insurance, reserves, and expiring credits," Climate Policy, Taylor & Francis Journals, vol. 3(2), pages 107-122, June.
    3. Jeffrey P. Prestemon & Thomas P. Holmes, 2000. "Timber Price Dynamics Following a Natural Catastrophe," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 145-160.
    4. M. Figueiredo & D. Reiner & H. Herzog, 2005. "Framing the Long-Term In Situ Liability Issue for Geologic Carbon Storage in the United States," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 10(4), pages 647-657, October.
    5. Jerry R. Skees & Barry J. Barnett, 1999. "Conceptual and Practical Considerations for Sharing Catastrophic/Systemic Risks," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 21(2), pages 424-441.
    6. Barnett, Barry J. & Coble, Keith H., 1999. "Understanding Crop Insurance Principles: A Primer For Farm Leaders," Research Reports 15784, Mississippi State University, Department of Agricultural Economics.
    7. Sheldon M Cohen, 2002. "Carbon-Based Conservation Strategies in Latin America: An Innovative Tool for Financing Environmental Conservation," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 27(2), pages 255-267, April.
    8. John Duncan & Robert J. Myers, 2000. "Crop Insurance under Catastrophic Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 842-855.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brunette, M. & Holecy, J. & Sedliak, M. & Tucek, J. & Hanewinkel, M., 2015. "An actuarial model of forest insurance against multiple natural hazards in fir (Abies Alba Mill.) stands in Slovakia," Forest Policy and Economics, Elsevier, vol. 55(C), pages 46-57.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liesivaara, Petri & Myyrä, Sami, 2014. "Government policies in changing climate and the demand for crop insurance," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170520, Agricultural Economics Society.
    2. Zhiwei Shen & Martin Odening, 2013. "Coping with systemic risk in index-based crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 44(1), pages 1-13, January.
    3. Brunette, M. & Holecy, J. & Sedliak, M. & Tucek, J. & Hanewinkel, M., 2015. "An actuarial model of forest insurance against multiple natural hazards in fir (Abies Alba Mill.) stands in Slovakia," Forest Policy and Economics, Elsevier, vol. 55(C), pages 46-57.
    4. Nicholas D. Paulson & Chad E. Hart & Dermot J. Hayes, 2010. "A spatial Bayesian approach to weather derivatives," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(1), pages 79-96, May.
    5. Coble, Keith H., 2000. "Farm Risk Policy At A Crossroad," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(1), pages 1-14, March.
    6. Paulson, Nicholas D. & Hart, Chad E., 2006. "A Spatial Approach to Addressing Weather Derivative Basis Risk: A Drought Insurance Example," 2006 Annual meeting, July 23-26, Long Beach, CA 21249, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Patrice Loisel & Marielle Brunette & Stéphane Couture, 2020. "Insurance and Forest Rotation Decisions Under Storm Risk," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(2), pages 347-367, July.
    8. Lysa Porth & Milton Boyd & Jeffrey Pai, 2016. "Reducing Risk Through Pooling and Selective Reinsurance Using Simulated Annealing: An Example from Crop Insurance," The Geneva Papers on Risk and Insurance Theory, Springer;International Association for the Study of Insurance Economics (The Geneva Association), vol. 41(2), pages 163-191, September.
    9. Zhang, Li, 2008. "Three essays on agricultural risk and insurance," ISU General Staff Papers 2008010108000016857, Iowa State University, Department of Economics.
    10. Paulson, Nicholas David, 2007. "Three essays on risk and uncertainty in agriculture," ISU General Staff Papers 2007010108000016979, Iowa State University, Department of Economics.
    11. Hongyun Han & Ye Jiang, 2019. "Systemic Risks of Climate Events and Households’ Participation in Mariculture Mutual Insurance: A Case Study of Shrimp Producers in Zhejiang Province," Sustainability, MDPI, vol. 11(4), pages 1-24, February.
    12. Woodard, Joshua D. & Garcia, Philip, 2008. "Weather Derivatives, Spatial Aggregation, and Systemic Risk: Implications for Reinsurance Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(1), pages 1-18, April.
    13. Martínez-Salgueiro, Andrea & Tarrazón-Rodón, María-Antonia, 2020. "Is diversification effective in reducing the systemic risk implied by a market for weather index-based insurance in Spain?," MPRA Paper 119924, University Library of Munich, Germany, revised 19 May 2021.
    14. Nganje, William E. & Tiapo, Napoleon M. & Wilson, William W., 2002. "Economic Impact Of Scab With Alternative Risk Management Strategy: The Case Of Crop Quality Insurance In Barley," Agribusiness & Applied Economics Report 23641, North Dakota State University, Department of Agribusiness and Applied Economics.
    15. Lysa Porth & Milton Boyd & Jeffrey Pai, 2016. "Reducing Risk Through Pooling and Selective Reinsurance Using Simulated Annealing: An Example from Crop Insurance," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 41(2), pages 163-191, September.
    16. Benjamin Dequiedt & Emmanuel Servonnat, 2016. "Risk as a limit or an opportunity to mitigate GHG emissions? The case of fertilisation in agriculture," Working Papers 1606, Chaire Economie du climat.
    17. Alexandre Cordier & Jean Gohin & Stephane Krebs & Arnaud Rault, 2013. "Dynamic Impacts of a Catastrophic Production Event: The Foot‐and‐Mouth Disease Case," Risk Analysis, John Wiley & Sons, vol. 33(3), pages 480-492, March.
    18. Akosah, Nana Kwame & Alagidede, Imhotep Paul & Schaling, Eric, 2020. "Testing for asymmetry in monetary policy rule for small-open developing economies: Multiscale Bayesian quantile evidence from Ghana," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    19. Cui, Xueting & Zhu, Shushang & Sun, Xiaoling & Li, Duan, 2013. "Nonlinear portfolio selection using approximate parametric Value-at-Risk," Journal of Banking & Finance, Elsevier, vol. 37(6), pages 2124-2139.
    20. Pichler, Anton & Poledna, Sebastian & Thurner, Stefan, 2021. "Systemic risk-efficient asset allocations: Minimization of systemic risk as a network optimization problem," Journal of Financial Stability, Elsevier, vol. 52(C).

    More about this item

    Keywords

    Risk and Uncertainty;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea05:19516. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.