Assessing crop yield and risk: a new method for calculating insurance based on rainfall

Fabian Capitanio; Azzam Hannoon; Jeffrey Darville; Alessio Faccia

doi:10.1007/978-3-030-32922-8_5

Assessing crop yield and risk: a new method for calculating insurance based on rainfall

Fabian Capitanio, Azzam Hannoon, Jeffrey Darville^*, Alessio Faccia

^*Corresponding author for this work

Birmingham Business School

Research output: Chapter in Book/Report/Conference proceeding › Chapter

Abstract

The aim of this paper is to explore a new method for data analysis that could be used for insurance calculations. In many agricultural nations rainfall per year and per annual quarter are good indications of the productive capacity in farmland. Essentially, there is a curvilinear relationship between rain and crop yield. The goldilocks zone varies by region and product, however, every farmer and minister of agriculture fears drought and/or flood. A Copula Quantile Regression (CQR) approach provides a novel approach to estimate the dependence of a function of the yield with respect to climate factors. This is then combined with quantile regression for nonlinear optics. This approach utilizes “Big Data” modeling and analytics to draw upon the wealth of information contained in the RICA databases. This study assesses variables such as the share of land covered by a sprinkler system, altitude, fragmentation of land, production intensity, rain, and temperature. It was found that this method provides a simpler and more flexible approach to analyze complex ecological, geological, economic, and sociological factors that impact business and commerce through risk management, strategic planning, and insurance.

Original language	English
Title of host publication	Sustainable Development and Social Responsibility—Volume 1
Subtitle of host publication	Proceedings of the 2nd American University in the Emirates International Research Conference, AUEIRC'18 – Dubai, UAE 2018
Editors	Miroslav Mateev, Jennifer Nightingale
Publisher	Springer
Pages	43-60
Number of pages	18
Edition	1
ISBN (Electronic)	9783030329228
ISBN (Print)	9783030329211, 9783030329242
DOIs	https://doi.org/10.1007/978-3-030-32922-8_5
Publication status	Published - 13 Feb 2020
Event	2nd American University in the Emirates International Research Conference - Dubai, United Arab Emirates Duration: 13 Nov 2018 → 13 Nov 2018

Publication series

Name	Advances in Science, Technology and Innovation
ISSN (Print)	2522-8714
ISSN (Electronic)	2522-8722

Conference

Conference	2nd American University in the Emirates International Research Conference
Abbreviated title	AUEIRC'18
Country/Territory	United Arab Emirates
City	Dubai
Period	13/11/18 → 13/11/18

Bibliographical note

Funding Information:
The passive preventive hedging tools (insurance) are the focus of this research. An insurance contract is a tool through which the company transfers its risk to third parties (insurance company). The company that underwrites an insurance contract effectively transfers to third parties (insurance company) the business risk or part of it, which in this case is represented exclusively by potential damage due to adverse weather or epizootics. At the same time, the insurance company is obliged, in respect of the insured, to compensate the company if an accident occurs according to the contract conditions. For the transfer of risk the agricultural company must bear a cost (insurance premium), for which it can receive partial financial support from the European Union or the State. The agricultural enterprise, which intends to sign an insurance contract, has two possibilities: adherence to a collective contract or the signing of an individual insurance contract.

Publisher Copyright:
© 2020, Springer Nature Switzerland AG.

Keywords

Agriculture
Climate factors
Crop yield and risk insurance
Risk management
Strategic planning

ASJC Scopus subject areas

Architecture
Renewable Energy, Sustainability and the Environment
Environmental Chemistry

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1007/978-3-030-32922-8_5

Cite this

Capitanio, F., Hannoon, A., Darville, J., & Faccia, A. (2020). Assessing crop yield and risk: a new method for calculating insurance based on rainfall. In M. Mateev, & J. Nightingale (Eds.), Sustainable Development and Social Responsibility—Volume 1: Proceedings of the 2nd American University in the Emirates International Research Conference, AUEIRC'18 – Dubai, UAE 2018 (1 ed., pp. 43-60). (Advances in Science, Technology and Innovation). Springer. https://doi.org/10.1007/978-3-030-32922-8_5

Capitanio, Fabian ; Hannoon, Azzam ; Darville, Jeffrey et al. / Assessing crop yield and risk : a new method for calculating insurance based on rainfall. Sustainable Development and Social Responsibility—Volume 1: Proceedings of the 2nd American University in the Emirates International Research Conference, AUEIRC'18 – Dubai, UAE 2018. editor / Miroslav Mateev ; Jennifer Nightingale. 1. ed. Springer, 2020. pp. 43-60 (Advances in Science, Technology and Innovation).

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abstract = "The aim of this paper is to explore a new method for data analysis that could be used for insurance calculations. In many agricultural nations rainfall per year and per annual quarter are good indications of the productive capacity in farmland. Essentially, there is a curvilinear relationship between rain and crop yield. The goldilocks zone varies by region and product, however, every farmer and minister of agriculture fears drought and/or flood. A Copula Quantile Regression (CQR) approach provides a novel approach to estimate the dependence of a function of the yield with respect to climate factors. This is then combined with quantile regression for nonlinear optics. This approach utilizes “Big Data” modeling and analytics to draw upon the wealth of information contained in the RICA databases. This study assesses variables such as the share of land covered by a sprinkler system, altitude, fragmentation of land, production intensity, rain, and temperature. It was found that this method provides a simpler and more flexible approach to analyze complex ecological, geological, economic, and sociological factors that impact business and commerce through risk management, strategic planning, and insurance.",

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author = "Fabian Capitanio and Azzam Hannoon and Jeffrey Darville and Alessio Faccia",

note = "Funding Information: The passive preventive hedging tools (insurance) are the focus of this research. An insurance contract is a tool through which the company transfers its risk to third parties (insurance company). The company that underwrites an insurance contract effectively transfers to third parties (insurance company) the business risk or part of it, which in this case is represented exclusively by potential damage due to adverse weather or epizootics. At the same time, the insurance company is obliged, in respect of the insured, to compensate the company if an accident occurs according to the contract conditions. For the transfer of risk the agricultural company must bear a cost (insurance premium), for which it can receive partial financial support from the European Union or the State. The agricultural enterprise, which intends to sign an insurance contract, has two possibilities: adherence to a collective contract or the signing of an individual insurance contract. Publisher Copyright: {\textcopyright} 2020, Springer Nature Switzerland AG.; 2nd American University in the Emirates International Research Conference, AUEIRC'18 ; Conference date: 13-11-2018 Through 13-11-2018",

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Capitanio, F, Hannoon, A, Darville, J & Faccia, A 2020, Assessing crop yield and risk: a new method for calculating insurance based on rainfall. in M Mateev & J Nightingale (eds), Sustainable Development and Social Responsibility—Volume 1: Proceedings of the 2nd American University in the Emirates International Research Conference, AUEIRC'18 – Dubai, UAE 2018. 1 edn, Advances in Science, Technology and Innovation, Springer, pp. 43-60, 2nd American University in the Emirates International Research Conference, Dubai, United Arab Emirates, 13/11/18. https://doi.org/10.1007/978-3-030-32922-8_5

Assessing crop yield and risk: a new method for calculating insurance based on rainfall. / Capitanio, Fabian; Hannoon, Azzam; Darville, Jeffrey et al.
Sustainable Development and Social Responsibility—Volume 1: Proceedings of the 2nd American University in the Emirates International Research Conference, AUEIRC'18 – Dubai, UAE 2018. ed. / Miroslav Mateev; Jennifer Nightingale. 1. ed. Springer, 2020. p. 43-60 (Advances in Science, Technology and Innovation).

Research output: Chapter in Book/Report/Conference proceeding › Chapter

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N1 - Funding Information: The passive preventive hedging tools (insurance) are the focus of this research. An insurance contract is a tool through which the company transfers its risk to third parties (insurance company). The company that underwrites an insurance contract effectively transfers to third parties (insurance company) the business risk or part of it, which in this case is represented exclusively by potential damage due to adverse weather or epizootics. At the same time, the insurance company is obliged, in respect of the insured, to compensate the company if an accident occurs according to the contract conditions. For the transfer of risk the agricultural company must bear a cost (insurance premium), for which it can receive partial financial support from the European Union or the State. The agricultural enterprise, which intends to sign an insurance contract, has two possibilities: adherence to a collective contract or the signing of an individual insurance contract. Publisher Copyright: © 2020, Springer Nature Switzerland AG.

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AB - The aim of this paper is to explore a new method for data analysis that could be used for insurance calculations. In many agricultural nations rainfall per year and per annual quarter are good indications of the productive capacity in farmland. Essentially, there is a curvilinear relationship between rain and crop yield. The goldilocks zone varies by region and product, however, every farmer and minister of agriculture fears drought and/or flood. A Copula Quantile Regression (CQR) approach provides a novel approach to estimate the dependence of a function of the yield with respect to climate factors. This is then combined with quantile regression for nonlinear optics. This approach utilizes “Big Data” modeling and analytics to draw upon the wealth of information contained in the RICA databases. This study assesses variables such as the share of land covered by a sprinkler system, altitude, fragmentation of land, production intensity, rain, and temperature. It was found that this method provides a simpler and more flexible approach to analyze complex ecological, geological, economic, and sociological factors that impact business and commerce through risk management, strategic planning, and insurance.

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Capitanio F, Hannoon A, Darville J, Faccia A. Assessing crop yield and risk: a new method for calculating insurance based on rainfall. In Mateev M, Nightingale J, editors, Sustainable Development and Social Responsibility—Volume 1: Proceedings of the 2nd American University in the Emirates International Research Conference, AUEIRC'18 – Dubai, UAE 2018. 1 ed. Springer. 2020. p. 43-60. (Advances in Science, Technology and Innovation). Epub 2020 Feb 12. doi: 10.1007/978-3-030-32922-8_5

Assessing crop yield and risk: a new method for calculating insurance based on rainfall

Abstract

Publication series

Conference

Bibliographical note

Keywords

ASJC Scopus subject areas

UN SDGs

Access to Document

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Cite this