Wavelet Based Assessment of Crop Yield Risk in Multiple Crop Insurance

Abstract

Crop insurance plays an important role in the stability and growth of the agriculture sector. Researching methods, including the wavelet methodology, Nonparametric (kernel) Density Estimation and VaR were discussed. Then we show the measurement procedure of measuring the yield risk of crops, including crop yield sequence processing and statistical features analysis; assessing the distribution of crop yield risk and calculation of crop yield risk value. The empirical results show that the degree of risk from low to high were rice, maize, wheat, cotton, soybean, oilseeds and peanut. Results showed that this insurance type has seldom been met in Jiangsu and is unattractive to farmers. The government should carry out more insurance type, such as peanut, oilseeds, which may suffer more risk to meet the need for farmer.
Key words: Crop insurance; Wavelet methodology; Kernel density estimation