A Study On Agricultural Drought Hazard Vulnerability And Risk Management

Along with the pace of industrialization and urbanization throughout the world, global climate faces with serious challenges. Especially in recent years, with global warming speeding up, the fierce changes of weather caused more frequent agriculture natural disasters, and the frequency and destructive degree of drought was becoming worse and worse. China is a land of obvious drought. Especially the drought lasting longer, being broad in scope and more serious has a great impact on agricultural production. The drought of Huanghuaihai plain in spring 2009 and southwest super-large serious drought from 2009 autumn-winter to 2010 spring formed grave threat to agricultural production and food security in our country. Higher frequency of drought occurrence and severe losses caused numerous scholars to pay more and more attention to the research issues on drought vulnerability. Drought disasters are the result of the interaction between drought risk and socio-economic vulnerability. Disaster mitigation lies on two aspects:one is reducing the risk of disaster-causing factors; another is reducing socio-economic vulnerability. Therefore, it has become an urgent issue to measure agricultural drought vulnerability degree, to analyze the causes of agricultural drought vulnerability, to find out the ways of reducing vulnerability to agricultural drought and to explore the means of preventing and defusing drought risk.The dissertation selected drought hazard vulnerability as the research direction, first described the generation and evolution pattern of agricultural drought hazard vulnerability. Then taking Xiaogan city as research region, the dissertation designed a core index of vulnerability evaluation from the perspective of social economy, used the fuzzy comprehensive evaluation method based on the analytic hierarchy process (AHP) to assess agricultural drought hazard vulnerability, and thoroughly analyzed the social economic factors influencing drought hazard vulnerability through principal component analysis (PCA) method. Based on the field survey, the dissertation analyzed the farmers' willingness to pay (WTP) on drought index insurance in Xiaogan city. Finally, based on the theoretical analysis and quantitative evaluation of Xiaogan agricultural drought hazard vulnerability, the dissertation explored drought risk management countermeasures from three different perspectives:the farmers'perspective, financial product innovation perspective and the government perspective. It has an important meaning for agricultural drought control and resistance, and can also provide theoretical basis for government formulating and implementing corresponding mitigation measures. The dissertation will exploit two potential policy plans:one is the change from passive crisis management methods to active risk management methods. This transformation is implemented through establishing drought disaster safety net, and it can effectively prevent drought formation or reduce the destruction effect. The other is the experimental implementation of drought index insurance and weather derivatives based on risk transferring and risk protection mechanism.This thesis comprises 8 chapters.The first chapter is the preface. It simply summarized the research background, basic concepts, domestic and international literature review, research purpose and significance, research ideas and methods and the basic framework structure of dissertation.Chapter 2 described the formation and evolution pattern of agricultural drought hazard vulnerability. This chapter first analyzed the composition of agricultural drought system from macroscopic, including hazard-formative factors subsystem, the hazard-formative environments subsystem, hazard-affected body's subsystem and human society economy subsystem four parts. Based on it, this chapter focused on expounding agricultural drought hazard vulnerability special formation mechanism from microcosmic, medium and macroscopic perspective three perspectives. Finally the chapter analyzed the evolution mechanism from the agricultural drought hazard vulnerability to drought disaster:one is the inner mechanism; the other is the external impact mechanism.Chapter 3 is agricultural drought hazard vulnerability assessment. Taking 7 counties of Xiaogan city in Hubei Province as the case study area, the chapter constructed agricultural drought hazard vulnerability evaluation index system and evaluation model, and then used the fuzzy comprehensive evaluation method to assess agricultural drought hazard vulnerability. The research result indicated that agricultural drought hazard vulnerability in Xiaogan city was significantly different, in which Dawu county had the highest vulnerability level in 7 counties. This meant that drought disaster risk in Dawu was the strongest, and it was the key area of drought risk management.Chapter 4 analyzed the dynamic changes causes of agricultural drought hazard vulnerability. According to the time and space changes of agricultural drought hazard vulnerability in the study area, it carried through empirical research using PCA methods, analyzed the correlation between impact factors and agricultural drought hazard vulnerability and the size of affecting degree. Chapter 5 designed the questionnaire based on farmers'perspective. According to the survey data of 273 households in Xiaogan city in Hubei province, the chapter empirically analyzed the influencing factors of the farmers'WTP for drought index insurance through the Logistic model. The research result showed that the surveyed households'WTP to agricultural drought insurance was not strong, in which 72.5 percent of farmers have no WTP, the premium which was paid willingly by the farmers with WTP was quite low, on average only RMB 12 Yuan per mu. Among the influence factors listed, five factors had significant effect on farmers'WTP, such as respondents'education level, arable land, the cognitive degree to the agricultural drought insurance, the trust degree to insurance company and the attitude of government subsidies to agricultural insurance.The policy recommendations:increasing investment on the rural human capital; increasing farmers' income, improving the ability to pay; strengthening propaganda education work to agricultural drought index insurance; exploring rational agricultural insurance subsidy way and standards; strengthening the research strength on weather index insurance, actively promoting the weather index insurance experimental work.Chapter 6 explored drought risk management from the perspective of financial product innovation. First introduced the implementation and experience of foreign agricultural weather index insurance and weather derivatives; second explained the necessity and feasibility of designing weather index insurance and weather derivatives in China; final designed drought index insurance and hedged against drought risk through weather derivatives.Chapter 7 bringed forward the policy suggestions to defense agricultural drought hazard from several aspects based on the perspective of government, including:building agricultural drought hazard monitoring and early warning systems; constructing drought disaster safety net based on the stakeholder; strengthening the construction of farmland irrigation infrastructure; promoting drought insurance systems; speeding up the adjustment of agricultural structure and developing dry farming.Chapter 8 is a summary and outlook. It summarized and induced the content of the preceding chapters, advanced research conclusion and inadequacies. The prospect of the further research was also presented.In a word, drought effect depends largely on social vulnerability degree while drought occurs. Drought disaster is the result of interaction between drought risk and social vulnerability. There are many factors affecting agricultural drought vulnerability, such as per capita GDP, per capita cultivated land, farmland irrigation rate, cultivated land evaluation, proportion of farmers'wage income to total income, total fiscal revenue, total fiscal expenditure, total investment in fixed assets, proportion of education expenditure to total financial expenditure; they are all important indexes. Proper risk management mode can effectively help farmers dealing with the weather disaster, reducing vulnerability degree and lessening the disaster loss. For example, the weather index insurance and weather derivatives can provide strong support, and buffer the risk loss that people may meet. Meanwhile, using the risk product also can potentially elevate the risk awareness of policymakers and ordinary people, urge people to take active measures against risks rather than passive waiting risk occuring. Under the background of the lack of effective agricultural insurance market in China, the government's participation plays a very important role in drought disaster relief work, such as government subsidies. Of course, government intervention may produce some negative effects, such as rent-seeking, moral hazard and extrusion effect etc. Thus it is crucial to enhance the information transparency, lower the cost and improve the technical level of drought risk management measures.The possible new ideas of this dissertation are as follows:firstly, the dissertation elaborated the agricultural drought risk management path taking the drought hazard vulnerability as the entry point. During designing agricultural drought hazard vulnerability measure index, this dissertation breaked through the limitations of only considering traditional geographic and hydrological natural factors, and fully choosed drought hazard vulnerability indicator to construct the core measure index of agricultural drought hazard vulnerability from the perspective of social economy. On the synthetic methods of measuring index, this dissertation respectively selected fuzzy comprehensive evaluation method based on AHP and PCA method, rather than simple arithmetic weighting method, which could objectively reflect the changes of agricultural drought hazard vulnerability status. Secondly, based on introducing the foreign latest research status and learning from foreign concrete implementation experience, the dissertation analyzed agricultural drought hazard risk management path based on financial product innovation perspective. It mainly included the weather index insurance and weather derivatives two aspects. And in the light of Xiaogan drought status, this dissertation systematically discussed the weather index insurance contract designing and several ways of using weather derivatives hedging drought disaster risk. Trying to make some experiments in this respect has the foundational significance for establishing weather derivatives trading market in China and providing certain theoretical basis and policy support for people to avoid and transfer weather risk. Thirdly, due to information asymmetry and high operating costs in agricultural insurance market, the commercial insurance in China did not want to be in agricultural insurance, and the policy-oriented agricultural insurance also had certain difficulties. This dissertation taked Xiaogan city in Hubei province as the study area, taked the first-hand material obtained by plenty of investigation as the foundation, and applied condition value evaluation method (CVM) to obtain farmers'WTP on drought index insurance. Based on it, the dissertation designed drought index insurance contract for regional, which compensated the insufficient of current domestic drought index insurance.