Open AccessWeather Derivatives in Russia: Farmers’ Insurance against Temperature Fluctuations
Author(s) -
Э. Каркин,
С. Чекиров,
А. Екимова,
К. Джонстон,
К. Ли,
В. Секриеру,
А. Стрельникова,
М. Трир,
Vladislav Trubnikov
Publication year - 2018
Publication title -
review of business and economics studies
Language(s) - English
Resource type - Journals
eISSN - 2311-0279
pISSN - 2308-944X
DOI - 10.26794/2308-944x-2018-6-1-29-42
Subject(s) - hedge , crop insurance , yield (engineering) , environmental science , derivative (finance) , computer science , business , meteorology , actuarial science , finance , agriculture , geography , ecology , materials science , archaeology , metallurgy , biology
This project proposes the use of weather derivatives, a type of financial instrument with a payout based on weather conditions, as a method for Russian farmers to hedge against daily temperature fluctuations. We created a weather derivative simulation tool in Microsoft Excel that calculates the effect of temperature on crop yield and then analyzes how the return of weather derivatives can potentially compensate for crop loss. Based on this tool, we developed a series of recommendations to help implement this system of protection with real users.