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MALLEE WHEAT FARMERS' DEMAND FOR CROP AND RAINFALL INSURANCE
Author(s) -
Patrlck George F.
Publication year - 1988
Publication title -
australian journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 0004-9395
DOI - 10.1111/j.1467-8489.1988.tb00474.x
Subject(s) - crop insurance , tobit model , moral hazard , yield (engineering) , business , actuarial science , adverse selection , insurance policy , hazard , agricultural science , agricultural economics , economics , agriculture , environmental science , geography , econometrics , incentive , materials science , microeconomics , metallurgy , chemistry , organic chemistry , archaeology
Producers' demand for a crop insurance program with indemnities based on their actual yields and a rainfall insurance program with indemnities based on area rainfall is analysed. Actuarial costs of these hypothetical programs are estimated. Tobit procedures are used to analyse factors influencing the amount which farmers would be willing to pay for the alternative insurance programs. Factors related to the absolute size of risk and capacity to bear risk, as well as personal characteristics and risk attitudes of producers, have effects on the demand for insurance as hypothesised. Problems of adverse selection are associated with the area yield‐based program, while both crop and rainfall insurance programs may involve some moral hazard. Producer participation in either program would be limited.