Optimum insurance contract of flood damage index insurance for rice farmers in Myanmar

Abstract Climate change is an underlying cause of many extreme events such as enormous cyclones and erratic torrential rains. These phenomena threaten farmers in coastal regions Myanmar. Self-insurance through means crop diversification insufficient for sustainable farm management. Weather index insurance (WII) receiving much attention because its low management costs. An optimum WII contract flood damage using rainfall the has been proposed rice regions. According to model, payment demand function derived by solving expected utility maximization problem. The specified constant relative risk aversion type. production Cobb–Douglas By substituting real average data into this function, premium are obtained. Changes compensation payments according increase price rice, rainfall, degree investigated. Results suggest that if farmer pays around 41.5 US dollars per year, then will be optimally stabilized under risk.