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AN ANALYSIS OF WILLINGNESS‐TO‐PAY FOR CROP INSURANCE *
Author(s) -
Fraser Rob W.
Publication year - 1992
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.1467-8489.1992.tb00713.x
Subject(s) - crop insurance , willingness to pay , yield (engineering) , risk aversion (psychology) , context (archaeology) , variance (accounting) , economics , welfare , actuarial science , agricultural economics , econometrics , expected utility hypothesis , agricultural science , microeconomics , agriculture , environmental science , financial economics , materials science , market economy , accounting , metallurgy , ecology , paleontology , biology
In this paper a method for estimating a producer's willingness‐to‐pay for crop insurance is presented. The method includes formulae to capture the impact of crop insurance on the producer's expected income and variance of income. These impacts are evaluated in the context of a model of producer welfare which features both price and yield uncertainty, as well as risk aversion on the part of the producer. The method is applied to the Australian wheat industry and estimates of willingness‐to‐pay are shown to be relatively sensitive to the levels of coverage and yield variability.