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

TY - JOUR

T1 - Natural insurance as condition for market insurance

T2 - Climate change adaptation in agriculture

AU - Jørgensen, Sisse Liv

AU - Termansen, Mette

AU - Pascual, Unai

PY - 2020/3

Y1 - 2020/3

N2 - 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.

AB - 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.

U2 - 10.1016/j.ecolecon.2019.106489

DO - 10.1016/j.ecolecon.2019.106489

M3 - Journal article

SN - 0921-8009

VL - 169

JO - Ecological Economics

JF - Ecological Economics

M1 - 106489

ER -