Insuring crops from space: the potential of satellite-retrieved soil moisture to reduce farmers’ drought risk exposure

Abstract Crop producers face significant and increasing drought risks. We evaluate whether insurances based on globally freely available satellite-retrieved soil moisture data can reduce farms’ financial risk exposure. design farm individual index for wheat, maize rapeseed production using a case study Eastern Germany. find that the significantly decrease exposure these crops compared to situation where is not insured. The also outperforms one estimates derived from meteorological measurements at ground stations. Important implications insurers policy makers are they could should develop better suited insurances. Available be used increase farmers’ resilience in changing climate.