Using insurance data to quantify the multidimensional impacts of warming temperatures on yield risk

Abstract

Previous research predicts significant negative yield impacts from warming temperatures, but estimating the effects on yield risk and disentangling the relative causes of these losses remains challenging. Here we present new evidence on these issues by leveraging a unique publicly available dataset consisting of roughly 30,000 county-by-year observations on insurance-based measures of yield risk from 1989–2014 for U.S. corn and soybeans. Our results suggest that yield risk will increase in response to warmer temperatures, with a 1 °C increase associated with yield risk increases of approximately 32% and 11% for corn and soybeans, respectively. Using cause of loss information, we also find that additional losses under warming temperatures primarily result from additional reported occurrences of drought, with reported losses due to heat stress playing a smaller role. An implication of our findings is that the cost of purchasing crop insurance will increase for producers as a result of warming temperatures.

Climate change will increase aflatoxin presence in US Corn

“…Temperature variables that were included in the model were measured by the time exposure to certain temperature ranges: C increment is estimated from a sinusoidal function of daily maximum and minimum temperature [24,30]. From the multiple temperature range sets, we choose the cutoff temperatures (26 • C and 36 • C in AS; 26 • C and 30 • C in AD) that best fit the data [4]. Because our purpose is to see the detrimental effect of temperature on aflatoxin that has positively associated with high temperature, we used time exposure to temperature ranges rather than degree days, a common temperature index.…”

“…However, indemnity varies due to corn price, insurance contract type, and coverage level. To minimize bias from aggregation, we normalized indemnity amount by using indemnity dollar paid per premium dollar paid [4]. To examine the impact of temperature and drought in the corn growing stage, and not storage-related events, we collected insurance claims data for only the months of June through September, when aflatoxin events are most likely to occur in the field.…”

“…Temperature effects have been demonstrated to have a compounding influence on both average crop yields and yield risks, have already begun to produce discernible effects, and can operate through biotic channels like pest damage [1,2] and abiotic channels encompassing both heat-and water-related stress, according to numerous studies [3][4][5][6][7][8][9][10][11][12][13]. Aflatoxin contamination is one of these risks, as it is likely to increase under a changing climate because of its association with warm and dry temperatures [14,15].…”

Divergent responses of maize yield to precipitation in the United States

“…The accurate representation of precipitation response of maize yield in crop models is essential to better predict crop yield losses caused by extreme climate. It also assists design novel insurance policies to compensate farmers' losses at finer scales (Perry andYu 2020, Diffenbaugh et al 2021). For example, the emerging weather index insurance established by linking weather conditions (mainly precipitation-related index) and yield losses has been demonstrated to be a cost-efficient way to improve drought risk management (Dalhaus et al 2018, Bucheli et al 2021, Vroege et al 2021.…”

Estimating temperature impacts on perennial crop losses in California: Insights from insurance data

“…The COL database contains the insurance payment information by specific causes such as cold wet weather, drought, freeze, frost, heat, and excess moisture 3 . The recently, researchers have been utilizing the COL data to gain more insights on the nature of crop losses (Lobell et al, 2011; Perry et al, 2020). Since our focus is to understand the role of temperature on crop losses, we limit our attention to temperature‐related losses.…”