A Study On Agriculture Natural Disaster Risk Management Based On Participants’ Behavior

China is one of countries in the world that natural disasters occurred most frequently. With global warming speeding up, natural disaster cycle gradually shortened and destructive degree was becoming worse and worse, which brought a great loss to weak agriculture. The crops disaster area increased significantly and the percent of economic losses caused by natural disasters in the total agricultural output value rose. Agricultural natural disasters have already become a main risk resource to threat the rural and farmers and a main factor to affect the sustainable development of agriculture and food security of China.The agricultural natural disasters risk management has became a core in China rural economic development. But at this stage, disaster relief and agricultural insurance subsidy system is subject to fiscal ability of government. Farmer’s risk self-sharing mechanism is lack of ability to resist risks in the face of increasingly severe disasters.The problems such as high loss ratio,moral hazard restrain the protection features of agricultural insurance.The agricultural catastrophe risk mechanism on national level has not yet been established. Absence of government led to a serious shortage of agricultural infrastructure investment and decline of agricultural engineering and disaster relief ability.Under market economic system, the collective organization weakening in social network weakens the behavior of prevention disaster joint with farmers.The lack of innovation in capital and financial derivatives market can’t provide more channels for agricultural natural disaster risk sharing.The severity of the agricultural natural disaster and limitation of the risk management mechanism has become a principal contradiction to China’s agricultural sustainable development and farmers’ income increasing. Therefore we must analyze the current agricultural natural disaster risk management mechanism, answer the agricultural natural disaster risk management subject boundary, function and role, and understand the behavior decision-making and its influencing factors of agricultural natural disaster risk participants.This study researches the improvement of the agricultural natural disaster risk management mechanism from the behavioral decision perspective of agricultural natural disaster risk management participants.First, the evolution of the current agricultural natural disaster risk management mechanism is analyzed from the perspective of institutional economics.Then taking Hubei province as the research object, we use mean-variance model under expected utility maximization as the tool to analyze the natural disaster risk management behaviors choice of the farmers, market and government theoretically and mpirically.Meanwhile the risk attitudes of farmers is province practically with the behavioral finance paradigm. Furthermore countermeasures and suggestions are put forward to perfect the mechanism of agricultural natural disaster risk management from risk self-sharing, market and government intervention mechanism.The main research contents and conclusions were as follows:Research content1:The agricultural natural disaster risk and its risk management mechanisms in Hubei provinceAs a big agricultural province,Hubei is also a natural disaster-prone province, agricultural natural disasters show that the inter-annual variation is big, affected rate is high and the drought and flood is the main caused factor.The agricultural natural disaster risk management mechanism in Hubei exsits the lackage such as agricultu ral insurance risk transfer function are not fully untilized, the risk self-sharing is the priority of farmers,catastrophe risk mechanism is imperfect,government disaster relief is although in a fundamental position but subjet to the fiscal income.Research content2:The behavior analysis of farmers to manage the risk of natural disasterFarmers are located in the core of the agricultural natural disaster risk management mechanism, so we must investigate the farmers’ risk behavior choice and its influencing factors, which is the precondition to improve the effective of risk management mechanism. This section studied the preference of risk management behavior, risk attitude, influence factors of the subject in order to understand the characteristics of demand subject through the theory analysis based on mean-variance model of behavioral decision under uncertain conditions.Research shows that:the risk self-sharing mechanism is the first choice of farmers to manage their risk. The normal natural disaster risk management tools such as government relief and bank loans have a lower possibility in farmers’ opinion.Based on behavioral finance analysis paradigm and questionnaire, it is pointed out characteristics that farmers have which weakened natural disasters information ability, herd mentality, disaster loss estimated based on the previous year rather than forecast enable farmers to lower bounded rationality and excessive or insufficient response to risk management. Cultivated land quality level, farmers’perception of natural disaster loss rate, production losses accounted for the proportion of household income and the importance of insurance have a significant influence on farmers risk management behavior choice.Based on the mean-variance model analysis shows that farmers insurance purchase behavior affected by risk attitude, the influence of the variance and expected loss. The main reasons that farmers are not willing to buy are as following:the people around them are not buy, self-consuming etc.. The behavior to buy agricultural insurance of farmers is subjected to the cultivated land quality level, whether to take measures or not, total cultivated land area, education years and the degree to trust the insurance company. Research content3:The behavior choice of market subject in agricultural natural disaster risk managementAgricultural risk management market mechanism which has the core of agricultural insurance and some supports of reinsurance, innovation of financial instruments is a system guarantee to realize agriculture sustainable development. This section analysis the present situation of the agricultural insurance supply, reinsurance market mechanism and innovation of the risk transfer tools. Research shows that:the level of agricultural insurance in our country is lower because of undifferentiated in insurance terms and rates among regions. The mean-variance model of behavioral decision for insurance companies proves that the agricultural insurance products supply is constrained to the operating costs, premium rate and cognitive degree of loss.Catastrophe risk and high operating cost reduce insurance supply.The supply is not associated with the number of insured farmers,it means that the quantity of insured farmers can’t spread agricultural insurance risk. Furthermore compulsory insurance system to improve the rate of agricultural insurance is inappropriate. Catastrophe risk dispersion system must be established to spread the risk of agricultural insurance fundamentally. Mean-variance model also proves that reinsurance can help to improve agricultural insurance supply capacity of insurance company. So the country should actively develop compulsory positive agricultural reinsurance and give subsidies. The weather index insurance can overcome the shortage of traditional insurance such as information asymmetry, high operating costs; benefits to the raise of insurance company accept insurance capacity. Agricultural risk insures itself will face natural disasters risk impact, they can transfer and disperse the risk through weather derivatives transactions to realize the risk dispersive in the whole society. Based on a certain assumed conditions the reinsurance pure rate is varied from insurance pay level and reinsurance liability for Hubei agricultural insurance reinsurance design. Finally taking rapeseed as an example, weather index insurance contract of Hubei is designed.Research content4:The ways that government intervene the agricultural natural disaster risk managementAgriculture has the nature of quasi-public goods; agricultural natural disaster is a kind of "social cost". So agricultural natural disaster risk management needs the intervention of government.The ways that government intervention in agricultural natural disaster risk management have the system provider, the public goods provider and the insurer.Research shows that:the disaster relief is subject to the limitation of the government financial income, financing efficiency is difficult to guarantee, the input structure of relief money is unreasonable. Agricultural insurance subsidies can increase the agricultural insurance demand and promote the sustainable development of agricultural insurance market.Irrigation and water conservancy infrastructure is essential to prevent and govern the flood and drought,but there are some problems such as the absence of investment and management subject, insufficient investment and unreasonable structure, etc.. Adopting new technology of farmers is one of the main way to prevent risks, the use of new technology depends on the improvement of agricultural technology popularization system.The government must establish catastrophe risk reserve system to guard against agricultural catastrophe risk impact to all risk management subject.Agricultural catastrophe risk reserve calculation results of Hubei show that if in five years for a disaster cycle, the catastrophe risk reserve is12.38million yuan, it is reasonable for Hubei to extract3%of the agricultural insurance premium income as catastrophe risk reserve.Research content5:The mechanism design of agricultural natural disaster risk managementThe mechanism design is focused on farmers’ risk self-sharing mechanism, market mechanism and government intervention mechanism based on the depth analysis of the subjects’ behavior choice and its influence factors.Government as a system supplier should establish and improve the operation guarantee mechanism to achieve the goal of building the multi-pillar, multi-level, three-dimensional agricultural natural disaster management mechanism.