Optimum insurance money of a flood disaster index insurance for rice farmers: The case of Labutta township in Ayeyarwady region in Myanmar
2020
Furuya, J. (Japan International Research Center for Agricultural Sciences (Japan)) | Hirano, A.
The objective of this study is to estimate an optimum insurance money of an index insurance of flood disaster for rice farmers in Labutta township in Ayeyarwady region in Myanmar. The model assumes that the farmers maximize their profit and insurance money minus the insurance premium, and their production function is specified as the Cobb-Douglas function. Furthermore, it is assumed that the farmers as firms are risk neutral. Solving the maximizing problem, the function of the optimum insurance money is derived. Substituting the average rate of damaged area, average input prices, and cost shares of the four inputs into the function, the optimum insurance money for the rice farmers is obtained. The percentage of the insurance money to the output value is 2.1%. This number is a guideline for a plan of insurance to adapt to climate change.
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