ABSTRACT
Growing water demand and increasingly uncertain supply are likely to raise drought-related damages in the following years. This is especially true for the agricultural sector, which accumulates the marginal uses of water. In this context, private–public partnerships for crop insurance are becoming increasingly relevant to compensate drought damages and maintain drought-related losses within socially acceptable thresholds. There exist a wide variety of crop insurance schemes worldwide, with different degrees of sophistication and state involvement. The adoption of one particular system is conditioned to the existent risk management policy, which is driven in turn by site-specific factors (e.g., budgetary constraints, exposure, vulnerability) that prevent the implementation of a “one size fits all” insurance scheme. Yet significant advantages can be obtained from advances in standard methods to estimate insurance costs and benefits to better inform the decisions on insurance design. This chapter hopes to provide an overview of existent crop insurance systems, cutting-edge scientific research from the field of economics, and persistent shortcomings that need to be addressed by future works.
