Affiliation:
1. National University of Science and Technology (Bulawayo, Zimbabwe)
Abstract
This study provides an evaluation of the effectiveness of the maize index insurance in reducing the risk exposure of small-scale farmers in Zimbabwe. Maize yields and rainfall data for the period 2010–2019 farming season were obtained from AGRITEXT and the NASA website. The Black-Scholes optional pricing framework was applied to estimate the prices of the maize index insurance. The mean root square loss (MRSL) was evaluated for the case where there is no insurance and where there is insurance. MRSL was compared for the two scenarios. The index insurance was found to be efficient in risk reduction as positive changes in MRSL were observed.
Subject
Environmental Engineering
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