Insuring against phytosanitary risks in Dutch protected horticulture: A stochastic model to support policy makers

Dutch protected horticulture is exposed to notifiable phytosanitary pests which are listed in the Quarantine list of the European Union (European Union, 2000). It is uncertain when or which quarantine pest will occur and what financial consequences this will have. These financial consequences stem from measures to be undertaken by growers, as legally required by the European Union (EU, 2000).
A method is presented to derive the probability distribution of phytosanitary costs, which can be used by government and industry to assess risk premiums and to determine the financial consequences of some subsidy on insurance premiums to create an adequate insurance fund. Volume streams and transmission of pests have been simulated for each subsequent product chain stage. Monte Carlo simulation is used to account for uncertainties in the probability of introduction, transmission and detection of a phytosanitary pest. The probability of phytosanitary costs was calculated for a number of selected crops in Dutch protected horticulture. These crop results has been enlarged for all the crops in protected horticulture.