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Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods

In this study we systematically reviewed the available literature on weather index insurance design between 2001 and 2020. In recent years, there has been a marked increase in ex-ante studies of index-based insurance as a financial risk management tool for agricultural risks. New and improved indice...

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Main Authors:	Abdi, Mukhtar Jibril, Raffar, Nurfarhana, Zulkafli, Zed, Nurulhuda, Khairudin, Mohamed Rehan, Balqis, Muharam, Farrah Melissa, Khosim, Nor Ain, Tangang, Fredolin
Format:	Article
Published:	Elsevier 2022
Online Access:	http://psasir.upm.edu.my/id/eprint/101870/ https://www.sciencedirect.com/science/article/pii/S2212420921006142
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id	my.upm.eprints.101870
record_format	eprints
spelling	my.upm.eprints.1018702023-08-15T04:14:40Z http://psasir.upm.edu.my/id/eprint/101870/ Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods Abdi, Mukhtar Jibril Raffar, Nurfarhana Zulkafli, Zed Nurulhuda, Khairudin Mohamed Rehan, Balqis Muharam, Farrah Melissa Khosim, Nor Ain Tangang, Fredolin In this study we systematically reviewed the available literature on weather index insurance design between 2001 and 2020. In recent years, there has been a marked increase in ex-ante studies of index-based insurance as a financial risk management tool for agricultural risks. New and improved indices have emerged, and new methods for quantifying the yield-index relationship have been explored to minimise basis risk in contract design. Our review indicated that rainfall-followed by temperature-based indices were most prevalent, while indices based on droughts and floods, vegetation, soil moisture, humidity, and sunshine hours were underrepresented despite their demonstrated potentials. Ordinary least square-based correlation and linear regression methods dominated yield-index modelling, while methods addressing extremes such as quantile regression and copulas have increased prominence in developed countries recently. We highlighted several new research trends to guide future research studies, in particular, the use of remote sensing data and hydrological and crop modelling to address data scarcity, geographical basis risk, and climate change. Elsevier 2022 Article PeerReviewed Abdi, Mukhtar Jibril and Raffar, Nurfarhana and Zulkafli, Zed and Nurulhuda, Khairudin and Mohamed Rehan, Balqis and Muharam, Farrah Melissa and Khosim, Nor Ain and Tangang, Fredolin (2022) Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods. International Journal of Disaster Risk Reduction, 67. art. no. 102653. pp. 1-12. ISSN 2212-4209 https://www.sciencedirect.com/science/article/pii/S2212420921006142 10.1016/j.ijdrr.2021.102653
institution	Universiti Putra Malaysia
building	UPM Library
collection	Institutional Repository
continent	Asia
country	Malaysia
content_provider	Universiti Putra Malaysia
content_source	UPM Institutional Repository
url_provider	http://psasir.upm.edu.my/
description	In this study we systematically reviewed the available literature on weather index insurance design between 2001 and 2020. In recent years, there has been a marked increase in ex-ante studies of index-based insurance as a financial risk management tool for agricultural risks. New and improved indices have emerged, and new methods for quantifying the yield-index relationship have been explored to minimise basis risk in contract design. Our review indicated that rainfall-followed by temperature-based indices were most prevalent, while indices based on droughts and floods, vegetation, soil moisture, humidity, and sunshine hours were underrepresented despite their demonstrated potentials. Ordinary least square-based correlation and linear regression methods dominated yield-index modelling, while methods addressing extremes such as quantile regression and copulas have increased prominence in developed countries recently. We highlighted several new research trends to guide future research studies, in particular, the use of remote sensing data and hydrological and crop modelling to address data scarcity, geographical basis risk, and climate change.
format	Article
author	Abdi, Mukhtar Jibril Raffar, Nurfarhana Zulkafli, Zed Nurulhuda, Khairudin Mohamed Rehan, Balqis Muharam, Farrah Melissa Khosim, Nor Ain Tangang, Fredolin
spellingShingle	Abdi, Mukhtar Jibril Raffar, Nurfarhana Zulkafli, Zed Nurulhuda, Khairudin Mohamed Rehan, Balqis Muharam, Farrah Melissa Khosim, Nor Ain Tangang, Fredolin Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods
author_facet	Abdi, Mukhtar Jibril Raffar, Nurfarhana Zulkafli, Zed Nurulhuda, Khairudin Mohamed Rehan, Balqis Muharam, Farrah Melissa Khosim, Nor Ain Tangang, Fredolin
author_sort	Abdi, Mukhtar Jibril
title	Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods
title_short	Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods
title_full	Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods
title_fullStr	Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods
title_full_unstemmed	Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods
title_sort	index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods
publisher	Elsevier
publishDate	2022
url	http://psasir.upm.edu.my/id/eprint/101870/ https://www.sciencedirect.com/science/article/pii/S2212420921006142
_version_	1775624501603598336
score	13.211869

Index-based insurance and hydroclimatic risk management in agriculture: a systematic review of index selection and yield-index modelling methods

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