Drought disaster risk assessment and yield insurance pricing of maize: a case study of Liaoning Province, China

Abstract

Starting from the ‘four-factors’ theory of natural disaster risk formation, the study first selects indices that represent hazard, vulnerability, exposure, and emergency response and recovery capability to construct the drought risk assessment index system. Then the natural disaster risk index method is employed to evaluate the risk of maize drought disasters in Liaoning. Finally, the pure premium rate for maize yield insurance is determined based on the risk assessment results and the Copula function. The results show that: (1) The hazard, vulnerability, and exposure index in northwestern Liaoning are high, while emergency response and recovery capability is relatively low. Therefore, northwestern Liaoning is identified as a high-risk area for drought risk. (2) There exists a negative correlation between the drought risk index and maize yield in most areas of Liaoning; that is, higher drought risk is associated with lower maize yield. (3) Under the same coverage level, pure rates are higher in the northwestern and eastern Liaoning and relatively lower in the southwestern and southeastern Liaoning. Under different coverage levels, higher coverage corresponds to increased pure rates. The results can offer valuable guidance and benchmarks for relevant departments in Liaoning Province to assess the impact of drought risk on agriculture.

Keywords

• Drought disaster
• maize
• risk assessment
• agricultural insurance
• Copula function
• SDG 13: Climate action