Multiple agricultural risks and insurance - Issues, perspectives, and illustration for wine-growing

Abstract

Agricultural producers face multiple risks, including climatic, disease, and market risks, that make crop insurance especially valuable to them. However, risk interactions raise specific issues: The value of prevention efforts in a multiple risk context, risk correlation, and compounded effects (whereby the realization of a risk makes it difficult to prevent another one) all affect the design and effectiveness of insurance. In contrast to the US, the EU-subsidized crop insurance creates different financial conditions for climate and pest risks and increases expertise costs. We discuss how this affects input use and disproportionately disadvantages organic producers because of compounded effects. We report on an experiment bundling a real pest insurance contract with an agronomic protocol aiming at reducing treatments, for vine-growing in the South-West of France. The experiment highlighted the costs to separating risks in insurance contracts, as well as the need for insurance to help transition to greener practices.

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Reference

Cécile Aubert, Yann Raineau, Marc Raynal, and Nicolas Pasquier, “Multiple agricultural risks and insurance - Issues, perspectives, and illustration for wine-growing”, Review of Agricultural, Food and Environmental Studies, vol. 105, December 2024, p. 371–391.