Extreme weather events and crop insurance demand

Flood, drought, and frost may be disruptive events for agriculture. The subsidised crop insurance schemes are coping strategies that increase farms resilience to weather shocks and in fact the occurrence of extreme weather events and the level of subsidised crop insurance are correlated. Stronger evidence is found in Southern geographical areas, where drought (a major risking risk) is more frequent, and for spring-summer crops, that are less resilient to weather shocks. The article points at the need to reform extant policies to move toward a holistic approach for risk management.