Rainfall-Related Weather Indices for Three Main Crops in China

Abstract

Rainfall-related hazards—deficit rain and excessive rain—inevitably stress crop production, and weather index insurance is one possible financial tool to mitigate such agro-metrological losses. In this study, we investigated where two rainfall-related weather indices—anomaly-based index (AI) and humidity-based index (HI)—could be best used for three main crops (rice, wheat, and maize) in China’s main agricultural zones. A county is defined as an “insurable county” if the correlation between a weather index and yield loss was significant. Among maize-cropping counties, both weather indices identified more insurable counties for deficit rain than for excessive rain (AI: 172 vs 63; HI: 182 vs 68); moreover, AI identified lower basis risk for deficit rain in most agricultural zones while HI for excessive rain. For rice, the number of AI-insurable counties was higher than the number of HI-insurable counties for deficit rain (274 vs 164), but lower for excessive rain (199 vs 272); basis risks calculated by two weather indices showed obvious difference only in Zone I. Finally, more wheat-insurable counties (AI: 196 vs 71; HI: 73 vs 59) and smaller basis risk indicate that both weather indices performed better for excessive rain in wheat-planting counties. In addition, most insurable counties showed independent yield loss, but did not necessarily result in effective risk pooling. This study is a primary evaluation of rainfall-related weather indices for the three main crops in China, which will be significantly helpful to the agricultural insurance market and governments’ policy making.

Keywords

Agricultural insurance / China / Deficit rain / Excessive rain / Risk pooling / Weather index

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