Risk-Efficient Coverage Selection Strategies for the Pasture, Rangeland, Forage (PRF) Insurance Program

The Pasture, Rangeland, Forage (PRF) insurance program is aimed to assist producers to manage the risk of forage loss due to the lack of precipitation. However, limited attention has been given to understanding the implications of policyholders’ coverage selection decisions. In this study, three alt...

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Bibliographic Details
Published in:Journal of agricultural and applied economics 2022-05, Vol.54 (2), p.286-305
Main Authors: Zapata, Samuel D., García, José María
Format: Article
Language:English
Subjects:
Agricultural economics
Crop insurance
Farm income
Forage
Insurance
Insurance coverage
Linear programming
Mathematical programming
Parameters
Pasture
Policyholders
Precipitation
Productivity
Rain
Rangelands
Risk management
Subsidies
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Summary:The Pasture, Rangeland, Forage (PRF) insurance program is aimed to assist producers to manage the risk of forage loss due to the lack of precipitation. However, limited attention has been given to understanding the implications of policyholders’ coverage selection decisions. In this study, three alternative risk-efficient portfolio selection strategies are assessed in to the context of the PRF program. Proposed methods consider all the decision parameters and program restrictions, and they highlighted the underlying relationships between expected revenue, risk, and choice of the coverage parameters. Selection strategies are illustrated by examining the optimal coverage for a grid in South Texas.
ISSN:1074-0708
2056-7405
DOI:10.1017/aae.2022.7