Designing public-private crop insurance in the northern limits of agriculture

Abstract

Government financed crop damage compensation (CDC) scheme is covering crop losses in Finland. The scheme is about to be abolished. Crop insurance scheme based on public–private partnership will be in place in 2016. In this study, we analysed how government expenditure will change due to the policy shift. According to a stochastic simulation model, the government’s risk exposure will decrease and the mean expenditures for the government as well as the variability in expenditure between years are expected to be lower, when the policy is shifted. The results obtained support the government’s decision to terminate the CDC scheme.