What is it about?
Climate index insurance is an alternative to cover the risk of agricultural losses due to crop failure due to climate change factors. Climate change is a threat to agriculture, especially food crops such as rice. Climate index insurance is an alternative to cover the risk of agricultural losses due to crop failure due to climate change factors. The observed climate index is the effect of growing degree days which measures the impact of temperature on plant growth and development. The data used in this study is daily temperature data at Climatology Station Class 1 Darmaga, Bogor and Citeko Class 3 Meteorological Station, West Java, during the gadu (rice that is planted in the Gadu/Dry season) planting period. In determining the amount of loss, the average daily temperature on growing degree days is calculated using a combination of a time series model and a deterministic model. The deterministic model describes the trend and seasonality of the time series at each station. The parameters contained in the model will be estimated using least-square. To see the dependence of temperature at different stations using a normal bivariate distribution.
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Why is it important?
The observed climate index is the effect of growing degree days which measures the impact of temperature on plant growth and development. The result show that the amount of loss based on the index of growing degree days per unit rupiah per degree Celsius (℃) for Citeko Class 3 Meteorological Station only occurs for certain percentages, namely 80%, 90%, and 95%, while for Climatology Station Class 1 Darmaga Bogor it can occur for each percentage. This indicates that the amount of losses obtained will depend on determining the strike level by using the mean and standard deviation of the growing degree days index distribution. Furthermore, these findings suggest that Climatology Station Class 1 Darmaga Bogor have higher risk of crop failure due to climate change than Citeko Class 3 Meteorological Station.
Perspectives
Collaborating on this paper was a fulfilling experience, enriched by working with co-authors with whom I have shared a long-standing professional relationship. This research not only deepened our understanding of the intricacies of climate insurance modeling but also led to engaging discussions with agricultural risk management groups, fostering new connections and potential advancements in sustainable insurance practices. More than anything, I hope this paper encourages others to explore innovative approaches to addressing the challenges of climate-related risks in agriculture. Beside that, I hope this article makes an alternative perspective for companies to determine premium for agricultural insurance.
Ahmad Fuad Zainuddin
Universitas Prasetiya Mulya
Read the Original
This page is a summary of: LOSS MODEL OF CLIMATE INSURANCE BASED ON EFFECT OF GROWING DEGREE DAYS INDEX, BAREKENG JURNAL ILMU MATEMATIKA DAN TERAPAN, May 2024, Universitas Pattimura,
DOI: 10.30598/barekengvol18iss2pp0893-0902.
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