Uncertain Monsoon, Irrigation and Crop Yields:Implications for Pricing of Insurance Products 20-28

A significant body of literature interested in studying the impact of weatherrisks on agricultural performance has modeled crop yields as a function of either levels or deviations in seasonal rainfall. However, an aspect that has received little attention in the literature relates to the impact of timing of the arrival of the monsoon on agricultural performance. In this paper, using a pan-India district-level panel dataset for a period of 50 years, we investigate three interrelated issues that are critical for managing the weather-induced agricultural risks. One, we examine the impact of timing of the arrival of the monsoon on crop yields. Two, we assess the mitigation benefits of irrigation against a delayed monsoon. And three,by simulating premium rates for an area yield insurance product at varying levels of irrigation coverage, we argue for differential pricing of insurance products for irrigated and rainfed crops or regions.