Securitizing Area Insurance: A Risk Management Approach

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Provided by: University of Rochester
Topic: Security
Format: PDF
In this paper, the author examines the possibility of developing a risk management instrument by designing a financial security whose value is linked to the average revenue of a given area. This type of program is sufficiently general to be considered for any group of businesses that face production uncertainty. In agriculture, it has been proposed as an alternative to multiple peril crop insurance programs, as area yield, revenue or rain-fall insurance in order to eliminate ex ante and ex post moral hazard.
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