Alternative Crop Insurance Indexes

Three index-based crop insurance contracts are evaluated for representative south Georgia corn farms. The insurance contracts considered are based on indexes of historical county yields, yields predicted from a cooling degree-day production model, and yields predicted from a crop-simulation model. For some of the representative farms, the predicted yield index contracts provide yield risk protection comparable to the contract based on historical county yields, especially at lower levels of risk aversion. The impact of constraints on index insurance choice variables is considered and important interactions among constrained, conditionally optimized, choice variables are analyzed.