Document Type : Research Paper
Authors
1
Department of Agricultural Economics, Colleges of Agriculture, University College of Agriculture And Natural Resources, University of Tehran, Karaj, Iran.
2
Corresponding author, Department of Agricultural Economics, Colleges of Agriculture, University College of Agriculture And Natural Resources,University of Tehran, Karaj, Iran.
10.22059/ijaedr.2025.389930.669356
Abstract
According to IPCC predictions, the vulnerability of developing countries and warm and dry regions due to climate change is higher than developed countries and other regions. While climate change itself is difficult to control, the associated damages can be mitigated by adjusting agricultural practices to better align with the changing climate conditions. One of the effective policy tools in changing the cultivation pattern is agricultural product insurance. Therefore, This study examined the impact of climate change on the yield of irrigated wheat in Iran's warm and dry regions and its effect on fair premium rates. To this end, annual time series data on irrigated wheat yields, and climate information collected from weather forecast stations from 1991 to 2018 were used to specify crop yield conditional probability distribution functions, using Moment-based regression models, and also specifying mixture probability distribution functions. Finally, a simulation approach was used to simulate the effects of expected climate changes over future years on the mean and variance of yield distribution and the yield premium rate of irrigated wheat in warm and dry regions. The actual fair premium rate for irrigated wheat in warm and dry regions, as implemented by the Agricultural Insurance Fund at the 75% coverage level, is 5.18%, while simulation results indicate that the actuarially fair premium rate is 11.27% under the baseline scenario and increases to 14.00% under the combined climate change scenarios expected in the 2030s. Therefore, implementing region-specific insurance premiums for wheat production, estimated based on the climatic risk conditions in the region, could be an effective policy to support this transition and is strongly recommended.
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