Abstract
Agriculture is the most vulnerable sector to climate change, e.g., temperatures or rainfall may significantly affect the crop yields, also leading the proliferation of pathogens and hence pests and diseases[1]. The total economic losses from weather-and climate-related have caused damages reaching nearly 487 billion of euros in EEA member countries since 1980, and just 3% of all events are responsible for 60% of economic losses [2]. Extreme weather events such as heavy precipitation, flood, drought, frost, heat, and strong wind are more and more frequent, intense, long-lasting, and they are the major drivers of agricultural losses [3, 4]. Heavy precipitation may reduce photosynthetically active radiation up to irreversible tissue damages, setting the conditions for diseases due to the proliferation of pathogens, nutrient leaching, soil erosion, and oxygen deficit [5, 6], also inducing flash flood events, in combination with other factors as the antecedent soil moisture [7, 8]. Drought and water shortage may affect the metabolism of plants with changes in root growth and architecture, and other tissue-specific responses that modify the flux of cellular signals [9]. The stress due to drought events is the main factor limiting the development of crop and its productivity [10]. Cold may damage the leaf and seedling survival, also leading to the sterility and the abortion of formed grains, especially for the cereal crops [11]. Heat directly affects the crop physiology, reducing photosynthesis rates, leading the acceleration of leaf senescence processes, oxidative damages, and pollen sterility [12]. Strong wind may also be very impactful (i.e., abrasions on the leaves and fruits, defoliations, water loss, desiccation, loss of flowers and poor fruit set), although the plants can change the structure and properties of cells and tissues, re-configuring their canopies as a defensive response [13]. On-farm and risk-sharing strategies are available to improve the resilience of farming systems to weather risks. The former includes risk control (i.e., risk prevention such as irrigation, shading, pest control, improved planning and monitoring activities), reserves (i.e., stocking, financial savings, additional labour input), and diversification (i.e., agricultural and structural diversification as nature conservation or agrotourism, off-farm allocation of resources); the latter includes risk pooling (i.e., mutual funds, agricultural insurance, membership in cooperatives, credit unions, producer organizations), and risk transfer (i.e., forwards, futures contracts) [14]. Member States may grant support for risk management tools (e.g., financial contribution to insurance premiums and to mutual funds) which can help farmers to manage production and income risks related to their agricultural activity and over which they have no control [15]. The new Common Agricultural Policy (CAP) reform is putting increasing emphasis on instrument supporting proactive management of the effects of extreme weather events due to climate change [15]. We provide an overview of the spread of risk management tools subsidised by new CAP 2023–2027, focusing on two promising tools: the weather index-based insurance and the Agri-CAT fund. We also discuss on their feasibility at farm-level, highlighting pros and cons, also animating the debate on how policymakers may improve the attractiveness of risk management tools.
Santeramo, F.; Baležentis, T.; Tappi, M. 2025. Weather and Yield Index-Based Insurance Schemes in the EU Agriculture: A Focus on the Agri-CAT Fund. Quantitative Risk Management in Agricultural Business / edited by H. Assa, P. LIu, S. Wang : Springer Cham, ISBN 9783031805738. p. 42–62. DOI: 10.1007/978-3-031-80574-5.