Korean Journal of Organic Agriculture (한국유기농업학회지)

Korean Association of Organic Agriculture (한국유기농업학회)
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Analysis of Farm Management Stabilization Effects Using Weather Derivatives for Apple Farmers in Kyeongpuk District

날씨파생상품을 이용한 경북지역 사과농가 경영안정 효과 분석

  • 윤성욱 (부산대학교 일반대학원 식품자원경제학과) ;
  • 최장훈 (보험연구원 생명.연금연구실) ;
  • 정원호 (부산대학교 식품자원경제학과)
  • Received : 2020.02.04
  • Accepted : 2020.10.19
  • Published : 2020.11.30
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Abstract

This study analyzes weather derivatives as an alternative risk management tool to stabilize farm revenue to complement the existing crop insurance program which suffers from asymmetric information problems such as adverse selection, moral hazard, and verifiability. We estimated apple yield functions to observe the relationship between yields and weather indices such as temperature and precipitation. Based on the estimated yield functions we designed weather futures and options products underlying temperature and precipitation, and calculated the prices of futures and options by two different approaches, historical distribution and Monte Carlo simulation. We found that weather futures and options stabilize farm revenue based on the estimated four risk indicators: Coefficient of Variation, Value at Risk, Certainty Equivalence, and Risk Premium. As a result, weather derivatives could be considered as a potential farm risk management tool through studying more in legal and institutional strategies and developing various derivatives products.

Keywords

Acknowledgement

본 논문은 2018년 대한민국 교육부와 한국연구재단의 지원을 받아 수행된 연구임(NRF-2018S1A5A8029037).

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