Abstract

CRUZ, Juan Sergio  and  LLINAS, Andrés. Climate by-products analytical model for specific risk events in Colombian agriculture. Cuad. Desarro. Rural [online]. 2010, vol.7, n.64, pp.121-147. ISSN 0122-1450.

The purpose of the present article is to prove that climate by-products can be used as agricultural insurance protection against climate unexpected, particular events in an incomplete market. Transferring risk to the market is an effective way of having protection when facing risks of diverse nature. An analytical model, as well as climate by-product pricing in the j region of Colombia, has been examined. Historical data of the region above mentioned in order to evaluate the relationship between agricultural productivity of Pr_x, Pr_y, Prz products and specific climate events such as R -rain or atmospheric precipitation- and H -temperature. Later on, a variety of call and put options will be considered based on heat and rain climatic risks in order to evaluate them theoretically. This paper thoroughly and particularly studies the analytical model in order to listen to the response from labor federations and academic groups. The present study has been framed within the field of risk and climate. The first document was presented at the International Symposium of Costa Rica in early 2009, where it obtained first place as best article in its session. At the time, conceptual guidelines were included to build an evaluation model for a climate by-product (Cruz, J. and Vargas, C. 2008). As mentioned earlier, this paper contains an analytical specification at model level, including an innovation to the model presented initially.

Keywords : Climate by-products; Climatic options; Agricultural risk; Specific events; Climate Insurance.

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