Drought risk management through rainfall-based insurance for rainfed rice production in Pangasinan, Philippines
2014
Silvestre, P.R.
Climate risk management, which includes risk transfer through crop insurance, is an important and reasonable step toward reducing the agricultural losses due to typhoons, floods and drought. Weather index-based insurance is an innovation in crop insurance which uses indices based on weather parameters to characterize crop loss or failure. It uses historical weather data from reliable weather gauging stations and its main issue is the determination of weather index that is closely correlated to crop yield loss. In this study, the rainfall-based crop insurance model for drought risk is based on the amount of the cumulative daily rice crop water requirement for vegetative stage, reproductive stage and maturity stage which are 270 mm, 210 mm, and 180 mm, respectively. Cumulative rainfall deficit from these threshold values indicate yield loss that serve as basis in the computation of payout. The amount of premium rates calculated based on the values of the probability of drought varies with planting period. For Pangasinan, the planting periods with minimum drought risk and consequently with low insurance premiums are from the fourth week of May to third week of June. This study also pointed out the challenges and constraints in the implementation of rainfall-based insurance that need to be addressed through institutional and policy recommendations, namely: (a) availability of weather gauging station; (b) affordability of insurance premium; and (c) policy support and regulatory framework for implementation of weather index-based insurance.
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