Weather Index Insurance Can Offset Heat‐Induced Rice Losses Under Global Warming

Abstract

Extreme heat is one major warming‐related threat to food security and farmers' livelihood, especially in Asia. As an economic adaptation, weather index insurance (WII) can transfer such weather‐related risks, secure farms' incomes, and recover agricultural systems soon after yield losses. However, few relevant studies evaluate its potential in the warming future. Here, we investigated the efficiency of WII to compensate for future heat‐induced yield losses (YHloss ${Y}_{Hloss}$) under SSP1‐2.6, SSP3‐7.0, and SSP5‐8.5 (Shared Socioecomoic Pathways, SSP) in southern China, a typical smallholder‐dominated rice production area in the world. Combining a crop model with machine learning, we found that heat‐induced rice vulnerability showed large spatial variability. Rice vulnerability and warming scenarios co‐determined future YHloss ${Y}_{Hloss}$ and economic losses at the county scale, with more significant losses in the mid‐far future (2051–2100) than in the near future (2021–2050). Compared with the historical period (1961–2010), YHloss ${Y}_{Hloss}$ will increase approximately by up to 5% under SSP1‐2.6, 18% under SSP3‐7.0%, and 26% under SSP5‐8.5. As an ex‐ante strategy, county‐specific WII will effectively improve (by up to 13%) and stabilize (by up to 36%) farmers' incomes, even though the pure premium rate will increase by 10% at 2050 and by 30% at 2100. Overall, our study demonstrates that WII is an effective economic adaption in the future for assisting smallholder livelihood in a developing country. WII has the potential to be applied in other countries for other crop failures to mitigate climate‐related risk for global food systems in the future.