Precautionary savings as an instrument to hedge the risk of hydrological drought in irrigated agriculture
- Autores: José Antonio Gómez-Limón Rodríguez, M. Dolores Guerrero-Baena, José Joaquín Fernández Gallardo
- Localización: XIII Congreso de Economía Agroalimentaria / coord. por María Dolores de Miguel Gómez; Narciso Arcas Lario (dir.), 2021, ISBN 978-84-17853-43-3, págs. 9-12
- Idioma: español
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Resumen
This paper explores the use of precautionary savings as a new risk management instrument that can be implemented to hedge hydrological drought risk in irrigated agriculture, a risk currently not covered by any policy instrument. For this purpose, the Drought Savings Account (DSA) is proposed as a personal savings account to which farmers make regular contributions, with withdrawals allowed in the event of irrigation water supply gaps in order to guarantee a minimum income. The implementation of the DSA is empirically assessed in a Mediterranean-climate irrigation district using an innovative simulation approach. Based on the results obtained, the DSA has proved to be a theoretically suitable policy instrument that can overcome the problems hindering the implementation of agricultural insurance, managing the risk in a more cost-effective way. This cost-effectiveness is a key advantage of precautionary savings over agricultural insurance, since the former instrument minimizes moral hazard ...
