Insuring crops from space: the potential of satellite-retrieved soil moisture to reduce farmers’ drought risk exposure

Willemijn Vroege; Janic Bucheli; T.P.F. Dalhaus; Martin Hirschi; R. Finger

doi:10.1093/erae/jbab010

Insuring crops from space: the potential of satellite-retrieved soil moisture to reduce farmers’ drought risk exposure

Willemijn Vroege, Janic Bucheli, T.P.F. Dalhaus, Martin Hirschi, R. Finger

Business Economics

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

Crop producers face significant and increasing drought risks. We evaluate whether insurances based on globally and freely available satellite-retrieved soil moisture data can reduce farms’ financial drought risk exposure. We design farm individual soil moisture index insurances for wheat, maize and rapeseed production using a case study for Eastern Germany. We find that the satellite-retrieved soil moisture index insurances significantly decrease risk exposure for these crops compared to the situation where production is not insured. The satellite-retrieved index also outperforms one based on soil moisture estimates derived from meteorological measurements at ground stations. Important implications for insurers and policy makers are that they could and should develop better suited insurances. Available satellite-retrieved data can be used to increase farmers’ resilience in a changing climate.

Original language	English
Article number	jbab010
Journal	European Review of Agricultural Economics
DOIs	https://doi.org/10.1093/erae/jbab010
Publication status	Published - Feb 2021

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title = "Insuring crops from space: the potential of satellite-retrieved soil moisture to reduce farmers{\textquoteright} drought risk exposure",

abstract = "Crop producers face significant and increasing drought risks. We evaluate whether insurances based on globally and freely available satellite-retrieved soil moisture data can reduce farms{\textquoteright} financial drought risk exposure. We design farm individual soil moisture index insurances for wheat, maize and rapeseed production using a case study for Eastern Germany. We find that the satellite-retrieved soil moisture index insurances significantly decrease risk exposure for these crops compared to the situation where production is not insured. The satellite-retrieved index also outperforms one based on soil moisture estimates derived from meteorological measurements at ground stations. Important implications for insurers and policy makers are that they could and should develop better suited insurances. Available satellite-retrieved data can be used to increase farmers{\textquoteright} resilience in a changing climate.",

author = "Willemijn Vroege and Janic Bucheli and T.P.F. Dalhaus and Martin Hirschi and R. Finger",

year = "2021",

month = feb,

doi = "10.1093/erae/jbab010",

language = "English",

journal = "European Review of Agricultural Economics",

issn = "0165-1587",

publisher = "Oxford University Press",

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T1 - Insuring crops from space: the potential of satellite-retrieved soil moisture to reduce farmers’ drought risk exposure

AU - Vroege, Willemijn

AU - Bucheli, Janic

AU - Dalhaus, T.P.F.

AU - Hirschi, Martin

AU - Finger, R.

PY - 2021/2

Y1 - 2021/2

N2 - Crop producers face significant and increasing drought risks. We evaluate whether insurances based on globally and freely available satellite-retrieved soil moisture data can reduce farms’ financial drought risk exposure. We design farm individual soil moisture index insurances for wheat, maize and rapeseed production using a case study for Eastern Germany. We find that the satellite-retrieved soil moisture index insurances significantly decrease risk exposure for these crops compared to the situation where production is not insured. The satellite-retrieved index also outperforms one based on soil moisture estimates derived from meteorological measurements at ground stations. Important implications for insurers and policy makers are that they could and should develop better suited insurances. Available satellite-retrieved data can be used to increase farmers’ resilience in a changing climate.

AB - Crop producers face significant and increasing drought risks. We evaluate whether insurances based on globally and freely available satellite-retrieved soil moisture data can reduce farms’ financial drought risk exposure. We design farm individual soil moisture index insurances for wheat, maize and rapeseed production using a case study for Eastern Germany. We find that the satellite-retrieved soil moisture index insurances significantly decrease risk exposure for these crops compared to the situation where production is not insured. The satellite-retrieved index also outperforms one based on soil moisture estimates derived from meteorological measurements at ground stations. Important implications for insurers and policy makers are that they could and should develop better suited insurances. Available satellite-retrieved data can be used to increase farmers’ resilience in a changing climate.

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DO - 10.1093/erae/jbab010

M3 - Article

JO - European Review of Agricultural Economics

JF - European Review of Agricultural Economics

SN - 0165-1587

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ER -