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Climate Variability and Crop Insurance: An Optimization Analysis

Author

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  • Holmes II, Glyen
  • Lorenzo, Alfredo
  • Solis, Daniel
  • Thomas, Michael

Abstract

Agricultural production is a risky endeavor. Farmers face uncertain yield (revenues) due to climate conditions, pest infestations and other stochastic production factors. Crop insurance offers farmers economic stability under these environments. This study focuses on the impact of climate variability on row crop production in North Florida. The climate in Southeast US is influenced by El Niño Southern Oscillation (ENSO). Recent scientific advances have improved the ability to predict climate fluctuations and provide opportunities to improve the management of climate-associated risks for agriculture. The study case includes farmers growing four crops corn, cotton, peanuts, and soybeans in Jackson County, Florida. We use enterprise budgets along with historical yield harvest data related to ENSO to create whole farm budgets under climate variability. Our study shows that climate variability significantly affects selecting the right crop insurance mixture for farmers.

Suggested Citation

  • Holmes II, Glyen & Lorenzo, Alfredo & Solis, Daniel & Thomas, Michael, 2016. "Climate Variability and Crop Insurance: An Optimization Analysis," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229603, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea16:229603
    DOI: 10.22004/ag.econ.229603
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    Keywords

    Environmental Economics and Policy; Risk and Uncertainty;

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