Economic impact analysis of agricultural insurance as a mechanism for climate change adaptation in three crops: potatoes, corn and broad beans. A 2030 study. Junin Region (Peru).

This paper analyzes agricultural insurance, considered as a mechanism for climate change adaptation. We have the hypothesis that indexed insurance is an optimal mechanism for adaptation due to its benefits and because it minimizes the possibility of moral hazard. The agricultural production of three crops (corn, potatoes, broad beans) in a future context of changes in various climatic variables is estimated. For this purpose, we develop a panel data model that incorporates economic and meteorological factors. Then, through a cost benefit analysis we evaluate the profitability on the use of indexed agricultural insurance. This paper is focused on Junin region located in Peru; however, the results also allow a greater understanding of the domestic situation. Therefore, the main contribution of this paper is to present the importance of an instrument for adaptation to climate change that benefits farmers, that is not widespread in Peru and Latin America in general, and that may be part of a comprehensive plan for adaptation to climate change.