Effect Evaluation Of Chinese Crop Insurance And Its Improvement

In the process of risk management an important step is the effect evaluation which not only can test theeffect of proposed risk management policy but also will provide solid suggestions for the futureimprovement. Effect evaluation and simulation had played a vital step in the finalizing of America’agricultural insurance program, but it is lagged in China in spite of the rapid development of Chineseagricultural insurance since2007. Therefore, the question of valuing Chinese crop insurance has beenput forward, and recently the effect evaluation of Chinese crop insurance program has become thehighlights in China, but the academic community needs to contribute more.Based on this, in order to reinforce the academic research in this area and to provide the theoreticalguidance for the practical work, I had conducted the research on four aspects in this dissertation with thesupport of welfare economics, agricultural economics and the theory of risk management. Firstly I hadanalyze the connotation and implement mechanism of crop insurance effect in principle, secondly thenthe measure and approach to evaluate the effect of crop insurance program had been discussed and thesimulation approach of farmers’ certainty equivalent with crop insurance has been proposed, and thenthe effect of Chinese crop insurance program has been evaluated based on the the micro-level datasetscoming from1004individual farmers of10provinces using the software of MATLAB, STATA andSIMETAR. Finally the potential effect of increasing insured value, actuarial ratemaking, alternativesubsidy and other improvements of current crop insurance had been analyzed and the specific andtargeted suggestions were made for the policymakers to perfecting Chinese crop insurance program.After the empirical study, we had made the following conclusions. a) It is appropriated to evaluate theeffect of crop insurance program in the view of farmer’s utility using the simulation approach; b)Current crop insurance program in China has increased farmers’welfare but still need to be improved toachieve the Pareto improvement; c) Making actuarial premium by county is necessary because there arehuge difference between the current premium and the actuarial one and it will improve farmer’s welfarein7out of10provinces; d) Increasing insured value will improve farmer’s welfare provided that thepremium subsidy ratio is above the required level, and will make government pay less keeping farmer’swelfare constant; e) More than50%of crop insurance premium should be subsidized by the governmentto motivate more farmers participate in the program; f) When the fund of premium subsidy is fixed,keeping high subsidy is more important than increasing the insured value; g) Combining area yieldinsurance with individual insurance will have good effect and worth to be piloted in China.The contributions of this dissertation are the innovations in terms of the perspective and approach ofcrop insurance effect. I also develop a new approach to assess crop yield risk based on data integration,and proposed a new kind of crop insurance production-combined insurance in this thesis.