Heat stress and crop yields in the Mediterranean basin: impact on expected insurance payouts

Insurance programmes have been indicated as a tool to reduce the economic risk associated with climate change, and crop growth simulation models can be used effectively to assess future trends in crop insurance payouts. This paper assesses the economic role of increasing weather extremes under future climate change on the expected insurance payouts for durum wheat (Triticum turgidum L. spp. durum) over the Mediterranean basin, focusing attention on the effects of heat stresses (HSs). A crop growth simulation, Sirius Quality version 2 (SQ2), calibrated for three varieties (long, medium and short growth cycle) was applied on seven sites under present (1975–1990) and future climate conditions (2030–2050) obtained from five regional circulation models under SRES scenario A1b. The intensity of HSs at anthesis was included as reducing factor of yield originally simulated by SQ2 calculated according to a specific empirical model. Simulated yields were then fitted to the most appropriate distribution, which was used to calculate the expected payouts according to the probability of yields being below a guaranteed level. We found that the simulated crop yields were, in general, negatively skewed and that Weibull probability density function (PDF), admitting negative skewing, provided the best performances in their fitting. The simulation of HSs modified the original shape of the Weibull PDF by increasing the skewness of the distribution. The results of the insurance model indicated that the modification of crop PDFs induced by HSs led to a general increase in payouts with respect to unstressed conditions, with a marked difference between present (+11 %, on average for the selected sites) and future periods (+25 %). When compared to the present, a general decrease in payouts (-1.1 %) was observed when HSs were not included in the simulations. Conversely, HSs impact resulted in a general increase in payouts (+10.3 %) where the highest increase was detected for the long growth cycle variety (+16.6 %) and the lowest for that with short growth cycle (-1.6 %). These results emphasize the importance of the appropriate characterization of crop yield distribution, the economic implications of HSs in a risk management context and a possible strategy to cope with climate change and variability.