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Weather Derivatives for Specific Event Risks in Agriculture
Author(s) -
Turvey Calum G.
Publication year - 2001
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1111/1467-9353.00065
Subject(s) - event (particle physics) , agriculture , business , environmental science , natural resource economics , economics , geography , physics , archaeology , quantum mechanics
This paper examines the economics and pricing of weather derivatives in Ontario and argues that weather derivatives and weather insurance can be used as a form of agricultural insurance. Using historical data, the relationship between crop productivity and weather is examined. Then a variety of put and call options for rain‐ and heat‐based weather risk are discussed and numerically evaluated. The evaluation examines in detail the pricing of insurance contracts at a given location and across space.