Climate Change, Weather Insurance Design and Hedging Effectiveness

The insurance industry has so far relied on historical data to develop and price weather insurance contracts. In light of climate change, we examine the effects of this practice in terms of the hedging effectiveness and profitability of insurance contracts. We use simulated crop and weather data for today’s and future climatic conditions to derive optimal weather insurance contracts. We assess the hedging effectiveness and profits of adjusted contracts that are designed with data that accounts for the changing distribution of weather and yields due to climate change. We find that, with climate change, the benefits from hedging with adjusted contracts almost triple and expected profits increase by about 240%. Furthermore, we investigate the effect on risk reduction (for the insured) and profits (for the insurer) from hedging future weather risks with non-adjusted contracts, which are based on historical weather and yield data. When offering non-adjusted insurance contracts, we find that insurers either face substantial losses, or generate profits that are significantly smaller than profits from offering adjusted insurance products. Non-adjusted insurance contracts that create profits in excess of the profits from adjusted contracts cause at the same time negative hedging benefits for the insured. We observe that non-adjusted contracts exist that create simultaneously positive profits and hedging benefits, however at a much larger uncertainty compared to the corresponding adjusted contracts.weather insurance design, climate change, non-stationarity, hedging effectiveness

Shifts in Apple Phenology under Climate Change in Switzerland and Implications for Exposure to Abiotic and Biotic Risks

It is expected that the development of plants and insects will be accelerated by global warming, resulting in an earlier occurrence of phenological stages in the future as compared to today. For plants, this could lead to a higher exposure to climatic shocks (late frosts in spring, and critical high temperatures in summer) and changes in the incidence of insect pests. Assessing the implications of such shifts in phenology is important to be able to devise, where necessary, means for reducing biotic and abiotic risks in plant production. In this contribution we present an analysis of the potential impacts of climate change on the risk of late frost and damages to fruits caused by critically high temperatures in apple orchards across Switzerland. We further discuss the possible effects of climate change on the appearance of the codling moth (Cydia pomonella L.), the key apple pest in many areas of the world. To conduct the analysis, we run carefully calibrated phenological models for different apple cultivars and the codling moth, feeding them with updated, transient climate change scenarios covering 1980-2100 developed for Switzerland on a 2 km x 2 km spatial-resolution grid. The climate scenarios represent three different emissions pathways allowing for consideration of a wide range of future climates. The results are discussed in a broader context by comparison with findings from other countries

Risk management strategies to cope with climate change in grassland production: an illustrative case study for the Swiss plateau

In this paper, we assess climate change impacts on an intensively managed grassland system at the Swiss Plateau using the process-based grassland model PROGRASS. Taking the CO2 fertilization into account, we find increasing yield levels (in the range of 10-24%) and sharp increases in production risks for an illustrative climate change scenario that suggests a marked increase in temperature and decrease in summer rainfall. Climate change-induced increases in the coefficients of variation of grassland yields are in the range of 21 and 50%. This finding underpins that additional risk management strategies are needed to cope with climate-change impacts on grassland production. The outputs from the grassland model are evaluated economically using certainty equivalents, i.e., accounting for mean quasi rents and production risks. To identify potential risk management strategies under current and future climatic conditions, we consider adjustments of production intensity and farm-level yield insurance. The impact of climate change on production intensities is found to be ambiguous: farmers' will increase intensity under unconstrained production conditions, but will decrease production intensity in the presence of a cross-compliance scheme. Our results also show that the considered insurance scheme is a powerful tool to manage climate risks in grassland production under current and future conditions because it can reduce the coefficients of variation of quasi rents by up to 50%. However, we find that direct payments tend to reduce farmers' incentives to use such insurance schem

Quantification of climate change impacts on agricultural pests

Temperature is the dominant abiotic factor determining development rates, preproduction and migration of many insects. Climate change will therefore alter population abundance, geographical distribution and seasonal phenology of important agricultural pests. Scenarios concerning possible impacts of climate change on pests are necessary to identify adapted plant protection strategies and sustainable plant management options. Model-based studies are a valuable method for estimating the impacts of climate change on insect pests. Such projections are not easy to develop, because impact models often require a high temporal and spatial resolution of future climate data and long-term field observations are necessary for model calibration and validation

Generic calibration of a simple model of diurnal temperature variations for spatial analysis of accumulated degree-days

Accumulated growing degree-days (aGDD) are widely used to predict phenological stages of plants and insects. It has been shown in the past that the best predictive performance is obtained when aGDD are computed from hourly temperature data. As the latter are not always available, models of diurnal temperature changes are often employed to retrieve the required information from data of daily minimum and maximum temperatures. In this study, we examine the performance of a well-known model of hourly temperature variations in the context of a spatial assessment of aGDD. Specifically, we examine whether a generic calibration of such a temperature model is sufficient to infer in a reliable way spatial patterns of key phenological stages across the complex territory of Switzerland. Temperature data of a relatively small number of meteorological stations is used to obtain a generic model parameterization, which is first compared with site-specific calibrations. We show that, at the local scale, the predictive skill of the generic model does not significantly differ from that of the site-specific models. We then show that for aGDD up to 800 °C d (on a base temperature of 10 °C), phenological dates predicted with aGDD obtained from estimated hourly temperature data are within ± 3 days of dates estimated on the basis of observed hourly temperatures. This suggests the generic calibration of hourly temperature models is indeed a valid approach for pre-processing temperature data in regional studies of insect and plant phenology

Prevalence and risk factors for thromboembolic complications in IBD patients

Background: Inflammatory bowel disease (IBD) patients have an increased risk of venous thromboembolic complications (VTEC) such as deep vein thrombosis (DVT) and pulmonary embolism when compared to the non-IBD population. However, studies assessing VTEC prevalence in IBD as well as analyses of VTEC associated risk factors are scarce. We aimed to assess VTEC prevalence in IBD patients and to identify associated risk factors. Methods: Data from patients enrolled in the Swiss IBD Cohort Study (SIBDCS) were analyzed. Since 2006 the SIBDCS collects data on a large sample of IBD patients from hospitals and private practices across Switzerland. Results: A  total of 90/2284 (3.94%) IBD patients suffered from VTEC. Of these, 45/1324 (3.4% overall; 2.42% with DVT, 1.51% with PE) had CD, and 45/960 (4.7% overall; 3.23% with DVT, 2.40% with PE) presented with UC

Implications of changes in seasonal mean temperature for agricultural production systems: three case studies

- The performance of dairy cows will suffer from elevated temperatures, reflecting the extent and uncertainty of projected warming in different scenarios, with a marked increase in heat stress for non-intervention scenarios (A1B and A2) toward the end of the century. This calls for the adoption of protective measures in the management of indoor and outdoor animal environments. - A substantial risk of a prolonged pest control season for the codling moth (an apple pest) is projected toward the end of the century for Northern Switzerland sites, and mid-century for the Ticino. Timely preventive programs are anticipated to represent a key ingredient of adaptation to changing risks from agricultural pests. - Results suggest that in the near future viticulture could benefit from increasing temperatures as a wider range of grape varieties could be grown. Toward the end of the century negative impacts from extreme temperatures are nevertheless expected to become important

Telemedicine for cardiac surgery candidates

Background: Cardiac surgery is generally well or over-represented in many Western countries. Since the southern part of Switzerland relies on 300 km distance centers for cardiac surgery, we started a project of telemedicine for the distant evaluation of cardiac surgery candidates. We report our experience of the results of the diagnosis made by telemedicine and by direct scrutiny of coronary angiograms. Methods: Coronary angiography was performed at the distant hospital by an invasive cardiology team. Teletransmission of images was performed using three Integrated Service Digital Network (ISDN) lines by direct transmission of recent recording. A total of 98 cases were reviewed (87 aorto-coronary bypass candidates, seven valvular and four congenital heart disease). We further performed a prospective blinded comparison of 47 consecutive cases with severe coronary artery disease (CAD) with respect to localization and number of significant coronary lesions, obtained by direct scrutiny of the original angiograms and the evaluation obtained with the teletransmitted images. Results: In 89 cases of the 98 analyzed (91%) correct diagnosis and surgical approach could be established by distant transmission. In nine cases (9%, all aortocoronary bypass candidates) definitive diagnosis and treatment was feasible only by direct scrutiny of the original angiograms. Five critically ill patients were urgently referred to the surgical care center based on the correct distant diagnosis. The blinded comparison of distant diagnosis and direct scrutiny of angiograms in defining 1-2-3 vessel CAD was good: r=0.87, P≪0.01. Conclusion: Initial experience using non-sophisticated telemedical transmission of angiograms of cardiac surgery candidates seems to be a promising facility for distantly located center

Application of long-range weather forecasts to agricultural decision problems in Europe

Agriculture can benefit substantially from long-range weather forecasts, for the month or the season, which can help to optimize farming operations and deal more effectively with the adverse impacts of climate variability, including extreme weather events. In the context of climate change, long-range weather forecasts also represent key elements for the development of adaptation strategies. In spite of an undeniable potential, long-range forecasts issued for instance by the European Centre for Medium-Range Weather Forecasts (ECMWF) have yet to find widespread application in European agriculture. To address partially the question of why this is the case, the performance of the ECMWF monthly ensemble forecasting system was examined. It was noted that predictability is currently limited to about 3 weeks for temperature and 2 weeks for precipitation and solar radiation. This may appear deceptive at first sight, but it was noticed that precipitation forecasts over a month are, overall, at least as valuable as information obtained from observed climatology. Encouraged by this finding, the possibility of using monthly forecasts to predict soil water availability was tested. In an operational context, this could serve as a basis for scheduling irrigation. Positive skills were found for lead times of up to 1 month. It was concluded that more systematic investigations of the possibilities offered by long-range forecasts should be undertaken in the future. However, this will require additional efforts to increase the quality of the forecasts, design appropriate application tools and promote the dissemination of the outcome within the agriculture communit