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ABSTRACT
In forest insurance policy, coverage level and premium subsidy are two important factors that affect farmers’ decision to be insured. This paper uses data from a survey of farmers in Hunan Province of China. First, a single-bounded dichotomous-choice valuation method is used to estimate the average amount that the farmers are willing to pay (WTP) for forest insurance. The results show that farmers’ average WTP is 0.65 RMB/acre (Chinese currency is referred as RMB), which is lower than the premium level prescribed in the existing forest insurance implementation program. Second, an acreltiple-bound dichotomous-choice valuation method is used to study farmers’ WTP for acreltiple coverage levels. Results show that when coverage equals 500 RMB/acre, 1,000 RMB/acre, and 2,000 RMB/acre, the median value of the premium level of farmers’ WTP is 0.922 RMB/acre, 1.954 RMB/acre and 2.893 RMB/acre, respectively. In a situation where the current premium rates are unchanged, and the coverage level is 500 RMB/acre, 1,000 RMB/acre, or 2,000 RMB/acre, the models predict the subsidy ratio should be 53.90, 51.15 and 63.84%, respectively. Improving the coverage level of existing forest insurance policies can significantly increase farmers’ expected rate of insurance.
Funding
This work was supported by the Fundamental Research Funds for the Central Universities (No.2015ZCQ-JG-01 & BLX2014-60); Beijing Higher Education Young Elite Teacher Project (No.YETP0778); National Natural Science Foundation of China (No.71403022); Beijing Municipal Social Science Foundation (No.14JGB047); the Ministry of Education of Humanities and Social Science Project (No. 13JHQ047); the research project of the Social Science and Humanity of the Ministry of Education (No. 15YJC790022 & 14YJC790022).