Open AccessHydrological drought index insurance for irrigation districts in Spain
Author(s) -
Teresa Maestro,
María Bielza,
Alberto Garrido
Publication year - 2016
Publication title -
spanish journal of agricultural research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.337
H-Index - 36
eISSN - 2171-9292
pISSN - 1695-971X
DOI - 10.5424/sjar/2016143-8981
Subject(s) - crop insurance , agriculture , index (typography) , irrigation , economic shortage , vulnerability (computing) , business , water scarcity , actuarial science , water resource management , agricultural economics , environmental science , economics , geography , computer science , world wide web , ecology , linguistics , philosophy , computer security , archaeology , government (linguistics) , biology
Hydrological droughts are a major risk for irrigated agriculture in many regions of the world. The aim of this article is to propose an insurance tool to help irrigators manage the risk of water scarcity in the framework of the Spanish Crop Insurance System (SCIS). Only the United States Insurance System provides this type of coverage, but has very restrictive conditions. To determine the type of insurance scheme that better fits with the SCIS and to the Spanish irrigated agriculture, an expert panel was held with the participation of all stakeholders involved in crop insurance. Following the expert panel conclusions, an hydrological drought index insurance (HDII) addressed to irrigation districts (ID) is proposed. It would compensate water deficits suffered in the whole ID. We detail the conditions that the ID should fulfill to be eligible for HDII. HDII is applied to the Bardenas Irrigation District V (ID-V) in Spain, and the hedging effectiveness of the instrument is analyzed comparing ID-V’s gross margins with and without the insurance contract. Results suggest that the proposed insurance scheme could provide an effective means of reducing farmers’ vulnerability to water shortages and there is no major impediment for it to be included as a new line in the SCIS. This type of insurance can be generalized to any ID fulfilling the conditions mentioned in this paper