Real Options and Reduction of Basic Risk of Index‐Based Climate Agricultural Insurance

This article is a discussion of the concept of index‐based agricultural insurance and the possible role of real options to reduce the basic risk. Indeed, to address the consequences of variability of weather within climate, experiments based on indexed agricultural insurance have been implemented in recent years. However, this locally defined insurance scheme has a weak point called the basic risk, i.e., the difference between the reality of...