Empirical Study on Farmers' WTP to Low-Probability Agricultural Risk Loss-A Case of Hurricane Crop Insurance in China

Natural disasters may increase in frequency and severity in the future as a result of climate change. Understanding about individual risk perceptions and behavioral responses to change of risks are relevant for insurers and government insurance policy makers, as it can help them to estimate the demand for new insurance products that cover weather-related damage. This study elicits individual farmer's risk beliefs and the demand for low-probability, high-impact wind insurance using the contingent valuation survey method among rice production farmers in Panjin, Liaoning of China. The results show that WTP for hurricane insurance is less than proportionally related to increased hurricane probabilities that were communicated to sampled farmers in the questionnaire. Communication of baseline probabilities and changes in hurricane probabilities using risk graders facilitate the comprehension of risk by respondents, and has a considerable effect on the level of the WTP and its sensitivity to probability changes. The results indicate that the current ex post government compensation scheme of hurricane damage lowers demand for private crop insurance.

並列關鍵字

Low-probability Risk ； Climate Change ； Willingness to Pay ； Crop Insurance ； Risk Grade

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國際替代計量

Empirical Study on Farmers' WTP to Low-Probability Agricultural Risk Loss-A Case of Hurricane Crop Insurance in China

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