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

Published by:
Online Location
Publication date
Number of Pages
Type of Publication:
Articles & Journals
Focus Region:
Focus Topic:
Climate / Weather / Environment
Rural Finance / Insurance
Type of Risk:
Weather & Climate related
Type of Risk Managment Option:
Risk transfer
Willemijn Vroege; Janic Bucheli; Tobias Dalhaus; Martin Hirschi; Robert Finger


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