Economic analysis of the introduction of agricultural revenue insurance contracts in Spain using statistical copulas

This article aims at determining how the introduction of agricultural revenue insurance contracts in Spain will affect the cost of purchasing insurance, relative to yield insurance schemes. We focus our empirical analysis on the apple and orange sectors in Spain. Statistical copulas are used to jointly model price and yield perils. Premium rates under revenue and yield insurance are simulated through Monte Carlo methods. Results indicate that revenue insurance is likely to reduce the price of agricultural insurance in Spain, which may result in higher acceptance and demand for agricultural insurance programs.