A new approach to weather insurance

Simple weather securities

The main innovation of the proposed new approach is to move away from single insurance policies calibrated to compensate average losses in favor of several simple weather securities—“weather tickets”—with fixed payments. These securities solve a number of problems faced by standard weather-index approaches—they are easy to understand and they are flexible, allowing farmers to choose a portfolio of securities depending on their particular risk profile and allowing all economic agents facing weather risks to participate.

Hill, Ruth
Robles, Miguel
Published date: 
International Food Policy Research Institute (IFPRI)
PDF file: