Climate change increases the need for better insurance solutions that enable farmers to cope with drought risks. We design weather index insurance using drought indices based on precipitation, soil moisture and evapotranspiration as underlying drought index and compare their risk-reducing potential for winter wheat producers in Eastern Germany. In general, we find that all drought indices can reduce financial risk exposure. However, the largest risk reduction can be achieved if the underlying drought index is tailored individually for each farm. This implies that insurers should offer insurance with farm-specific underlying drought index.

中文翻译：

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设计天气指数保险的最佳干旱指数

气候变化使人们需要更好的保险解决方案，以使农民能够应对干旱风险。我们以干旱指数为基础设计天气指数保险，干旱指数基于降水，土壤湿度和蒸散量作为基础干旱指数，并比较其对德国东部冬小麦生产商降低风险的潜力。总的来说，我们发现所有干旱指数都可以减少金融风险。但是，如果针对每个农场分别量身定制基础干旱指数，则可以最大程度地降低风险。这意味着保险公司应提供针对农场的潜在干旱指数的保险。