Insuring crops from space: the potential of satellite-retrieved soil moisture to reduce farmers’ drought risk exposure

Open access
Date
2021-03Type
- Journal Article
Abstract
Crop producers face significant and increasing drought risks. We evaluate whether insurances based on globally and freely available satellite-retrieved soil moisture data can reduce farms’ financial drought risk exposure. We design farm individual soil moisture index insurances for wheat, maize and rapeseed production using a case study for Eastern Germany. We find that the satellite-retrieved soil moisture index insurances significantly decrease risk exposure for these crops compared to the situation where production is not insured. The satellite-retrieved index also outperforms one based on soil moisture estimates derived from meteorological measurements at ground stations. Important implications for insurers and policy makers are that they could and should develop better suited insurances. Available satellite-retrieved data can be used to increase farmers’ resilience in a changing climate. Show more
Permanent link
https://doi.org/10.3929/ethz-b-000469151Publication status
publishedExternal links
Journal / series
European Review of Agricultural EconomicsVolume
Pages / Article No.
Publisher
Oxford University PressSubject
remote sensing; weather index insurance; soil moisture; risk management; agricultureOrganisational unit
09564 - Finger, Robert / Finger, Robert
03778 - Seneviratne, Sonia / Seneviratne, Sonia
Funding
727520-2 - Towards SUstainable and REsilient EU FARMing systems (EC)
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