Drought Risk Management through Rainfall- Based Insurance for Rainfed Rice Production in Pangasinan, Philippines

Climate risk management which includes risk transfer through crop insurance is an important and reasonable step toward reducing the agricultural losses due to typhoons, floods and droughts. Weather index-based insurance is an innovation in crop insurance which uses indices based on weather parameters to characterize crop loss or failure. It uses historical weather data from reliable weather gauging stations and its main issue is the determination of weather index that is closely correlated to crop yield loss. In this study, the rainfall-based insurance model is based on the amount of rainfall (weather-index) to meet the rice crop water requirement in its different phases of growth and development. For PSBRc14, a typical rainfed rice variety with 110 maturity days, the cumulative crop water requirement for vegetative, reproductive and maturity stages are 270mm, 210mm, and 180mm, respectively. From these threshold values, the probability of cumulative rainfall deficit for each stage based on the relative frequency of rainfall distribution indicate drought risk. The probability of drought used in the computation of premium rates varies with planting period. For Pangasinan, the planting periods with minimum probability of drought and consequently with low insurance premiums are from the fourth week of May to third week of June. The challenges and constraints in the implementation of rainfall-based insurance that need to be addressed through institutional and policy recommendations include: (a) availability of weather gauging station; (b) affordability of insurance premium; and (c) policy support and regulatory framework for its implementation.

Keywords: crop water requirement, drought risk, rainfall-based insurance, rainfall deficit