PubData Leuphana Repository: Agro-biodiversity as natural insurance and the development of financial insurance markets

Please use this identifier to cite or link to this item: https://doi.org/10.48548/pubdata-1268

Resource type	Working Paper
Title(s)	Agro-biodiversity as natural insurance and the development of financial insurance markets
DOI	10.48548/pubdata-1268
Handle	20.500.14123/1331
Creator	Baumgärtner, Stefan 0000-0001-8314-8462 121846857 Quaas, Martin F. 0000-0003-0812-8829
Abstract	Agro-biodiversity can provide natural insurance to risk averse farmers. We employ a conceptual ecological-economic model to analyze the choice of agrobiodiversity by risk averse farmers who have access to financial insurance. We study the implications for individually and socially optimal agro-ecosystem management and policy design when on-farm agro-biodiversity, through ecosystem processes at higher hierarchical levels, generates a positive externality on other farmers. We show that for the individual farmer natural insurance from agro-biodiversty and financial insurance are substitutes. While an improved access to financial insurance leads to lower agro-biodiversity, the e_ects on the market failure problem (due to the external benefits of on-farm agro-biodiversity) and on welfare are determined by properties of the agro-ecosystem and agro-biodiversity’s external benefits. We derive a specific condition on agro-ecosystem functioning under which, if financial insurance becomes more accessible, welfare in the absence of regulation increases or decreases.
Language	English
Keywords	Biodiversity; Agriculture; Ecosystem; Management; Risk Aversion; Biodiversität; Ökosystem; Agrarökosystem; Agrarplanung; Versicherung; Insurance
Year of publication in PubData	2007
Publishing type	First publication
Publication version	Published version
Date issued	2007-09-12
Creation context	Research
Published by	Medien- und Informationszentrum, Leuphana Universität Lüneburg
Related resources	Relations of this publication Relations of this publication