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

Fabian Capitanio, Azzam Hannoon, Jeffrey Darville, Alessio Faccia

Research output: Chapter in Book/Report/Conference proceedingChapter

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 languageEnglish
Title of host publicationSustainable Development and Social Responsibility—Volume 1
Subtitle of host publicationProceedings of the 2nd American University in the Emirates International Research Conference, AUEIRC'18 – Dubai, UAE 2018
EditorsMiroslav Mateev, Jennifer Nightingale
PublisherSpringer
Pages43-60
Number of pages18
Edition1
ISBN (Electronic)9783030329228
ISBN (Print)9783030329211, 9783030329242
DOIs
Publication statusPublished - 12 Feb 2020

Publication series

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

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

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