Index Insurance and Pastures

Posted: 21 Nov 2008 Last revised: 15 Dec 2009

Date Written: November 25, 2009

Abstract

We explore potential effects of index based insurance on common property resources, assessing its impacts on the animal stocking decisions of pastoralists and the resulting impact on a common property pasture. We find a range of potential outcomes. Although index insurance has the capability of enhancing the welfare of pastoralists by augmenting expected payoffs without degrading the common property resource, under some conditions the insurance can increase overstocking problems in low rainfall states of nature. If identified, these potential unintended negative effects of the insurance on common property might be mitigated by additional technological and/or market interventions.

Keywords: Index Insurance, Pasture, Common Property

JEL Classification: G2, O13, P14

Suggested Citation

Bhattacharya, Haimanti and Osgood, Daniel, Index Insurance and Pastures (November 25, 2009). Available at SSRN: https://ssrn.com/abstract=1304246

Haimanti Bhattacharya (Contact Author)

University of Utah ( email )

Department of Economics
1645 E Campus Center Drive, #308
Salt Lake City, UT 84112
United States

HOME PAGE: http://www.econ.utah.edu/~bhattacharya

Daniel Osgood

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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