Agricultural Profits depend on the weather. In addition, there is a substantially huge literature in development economics on mechanisms dealing with risk and the ante consequence of uninsured risk for investment, production, and household organization choices. Nevertheless, there is little work performed in order to reduce risk via better forecasting. Insurance permits farmers to ignore risk allowing them to capitalize on expected profits. Perfect forecasting is even better though due to allowing farmers to make optimal production choices conditional to the realized weather.
This presentation is based on AMA Innovation Lab projects for the 2013 BASIS/I4 Technical Committee Meeting. This meeting gathered researchers affiliated with the Index Insurance Innovation Initiative (I4) at UC Davis.
This presentation took place in University of California Davis, United States.