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EVALUATING THE HURRICANE INSURANCE PROTECTION-WIND INDEX (HIP-WI) POLICY FOR CROP FARMERS IN HURRICANE-PRONE AREAS IN SOUTHEAST UNITED STATES

Omowunmi Odeyomi, Charity Greene, and Godfrey Ejimakor

Summary

Agriculture is a risky enterprise because of its dependence on climatic conditions, and the time lag between decision-making and actualizing returns for the enterprise. Therefore, the need arises to mitigate risks to protect farmers to increase the adaptability and resilience of farmers to climatic conditions. The Federal Crop Insurance Program is an institutional mechanism through which the government helps farmers cope better with risks by providing subsidies on premiums. Farmers that adopt crop insurance can share the loss incurred with others in the same area with other adopters. Farmers face lots of climate-induced risks and uncertainties such as droughts, floods, hurricanes, wildfires, etc. Farmers in the southeastern US are prone to hurricanes that have increased in severity and frequency due to climate change. We contribute to providing information on the coverage of the Hurricane Index Protection- Wind Index(HIP-WI) Program by studying the shifts and trends in insured acreage across sample states. We use data from the Risk Management Agency Database for information on the HIP-WI policy from inception to date to quantify coverage levels in States affected by hurricanes. Data from the USDA census is used to examine the characteristics of the insured areas. We examine variabilities to identify areas of needed interventions. The information from our study will help identify deficient regions, reveal deficiencies, and identify target areas where efforts should be improved to increase adoption.

Details

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