The sensitivity of hydroclimatic risk to plausible future hydroclimatic changes in the irrigated rice paddies of Malaysia

Conventional weather index insurance, relying on historical data, is widely used to assess crop loss risk. However, climate change challenges its reliability. This study aims to integrate future hydroclimatic variability and crop dynamics into index-based insurance design, and to assess the hedging hydroclimatic risk by different climate change projections and associated yield losses. Various yield-index dependencies representing basis risk were evaluated under three plausible future climate change scenarios based on projected changes in precipitation (drier, wetter, and warmer-moderate wet). The yield-index reflects the relationship between crop losses and hydroclimatic events, considering variations in hydroclimatic variables, planting seasons, index aggregation months, and hydrological response units. The effectiveness of hedging hydroclimatic risk was assessed by accounting for the likelihood of yield losses, with and without climate change. The strength of the yield-index varied across indices and indicated non-stationarity across time and space, with solar radiation and streamflow being more important during wetter season, and temperature and rainfall more influential in drier season. These relationships shifted under different climate scenarios, where temperature and streamflow are strongly correlated in drier future climate, and solar radiation is strongly correlated in wetter future climate. Failing to account for climate change in hedging hydroclimatic risk can increase the risk by up to 1.6 times due to underestimation of yield losses. Thus, this study presents a novel approach by integrating future hydroclimatic variability and spatiotemporal crop dynamics from hydro-crop modelling into index, insurance design, offering a more comprehensive representation of water and climate risks to future rice yields and enabling more robust agricultural risk management.

Text 122705.pdf - Published Version Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (2MB) Official URL or Download Paper: https://link.springer.com/article/10.1007/s10584-0...

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