Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton
This article makes an initial attempt to design catastrophe (CAT) bond products for agriculture and examines the potential of these instruments as mechanisms for transferring agricultural risks from insurance companies to investors/speculators in the global capital market. The case of Georgia cotton...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Western Agricultural Economics Association
2006-08-01
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| Series: | Journal of Agricultural and Resource Economics |
| Subjects: | |
| Online Access: | https://ageconsearch.umn.edu/record/8610 |
| _version_ | 1818440103712784384 |
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| author | Dmitry V. Vedenov James E. Epperson Barry J. Barnett |
| author_facet | Dmitry V. Vedenov James E. Epperson Barry J. Barnett |
| author_sort | Dmitry V. Vedenov |
| collection | DOAJ |
| description | This article makes an initial attempt to design catastrophe (CAT) bond products for agriculture and examines the potential of these instruments as mechanisms for transferring agricultural risks from insurance companies to investors/speculators in the global capital market. The case of Georgia cotton is considered as a specific example. The CAT bond contracts are based on percentage deviations of realized state average yields relative to the long-run average. The contracts are priced using historical state-level cotton yield data. The principal finding of the study is that the proposed CAT bonds demonstrate potential as risk transfer mechanisms for crop insurance companies. |
| first_indexed | 2024-12-14T18:07:02Z |
| format | Article |
| id | doaj.art-df96f9b9b44d4300af16e48b6dc4639e |
| institution | Directory Open Access Journal |
| issn | 1068-5502 2327-8285 |
| language | English |
| last_indexed | 2024-12-14T18:07:02Z |
| publishDate | 2006-08-01 |
| publisher | Western Agricultural Economics Association |
| record_format | Article |
| series | Journal of Agricultural and Resource Economics |
| spelling | doaj.art-df96f9b9b44d4300af16e48b6dc4639e2022-12-21T22:52:21ZengWestern Agricultural Economics AssociationJournal of Agricultural and Resource Economics1068-55022327-82852006-08-0131231833810.22004/ag.econ.86108610Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia CottonDmitry V. VedenovJames E. EppersonBarry J. BarnettThis article makes an initial attempt to design catastrophe (CAT) bond products for agriculture and examines the potential of these instruments as mechanisms for transferring agricultural risks from insurance companies to investors/speculators in the global capital market. The case of Georgia cotton is considered as a specific example. The CAT bond contracts are based on percentage deviations of realized state average yields relative to the long-run average. The contracts are priced using historical state-level cotton yield data. The principal finding of the study is that the proposed CAT bonds demonstrate potential as risk transfer mechanisms for crop insurance companies.https://ageconsearch.umn.edu/record/8610cat bondscatastrophe bond pricingcatastrophe insurancedisaster riskreinsurancerisk securitization |
| spellingShingle | Dmitry V. Vedenov James E. Epperson Barry J. Barnett Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton Journal of Agricultural and Resource Economics cat bonds catastrophe bond pricing catastrophe insurance disaster risk reinsurance risk securitization |
| title | Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton |
| title_full | Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton |
| title_fullStr | Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton |
| title_full_unstemmed | Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton |
| title_short | Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton |
| title_sort | designing catastrophe bonds to securitize systemic risks in agriculture the case of georgia cotton |
| topic | cat bonds catastrophe bond pricing catastrophe insurance disaster risk reinsurance risk securitization |
| url | https://ageconsearch.umn.edu/record/8610 |
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