Assessment of formal, natural and social insurances: how to cope best with impacts of extreme events on grasslands for sustainable farming systems?

• Applicants: Dr. Birgit Müller; Professor Dr. Martin F. Quaas
• Subject Area: Agricultural Economics, Agricultural Policy, Agricultural Sociology ; Ecology of Land Use
• Term: since 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 460738920

The impacts of climate change pose one of the main challenges for agriculture in Central Europe. In particular, an increase of extreme and compound extreme climate events is expected to strongly impact economic revenues and the provision of ecosystem services by agroecosystems. A highly relevant, still open question is how grassland farming systems can cope best with these climate risks to adapt to climate change. A prominently discussed economic instrument to relieve income risks is the formal insurance, but natural and social insurances are newly under discussion as well. Natural insurances include specific grassland management practises such as maintaining species-rich grasslands. Social insurances, in our terminology, comprise all forms of societal support for farmers’ climate risk management. This includes in particular arrangements of community-supported agriculture that reduce income risks for farmers, or payments for ecosystem services if their design takes risk into account. Formal, natural and social insurances may be substitutes or complements, and affect farmer behaviour in different ways. Thus, policy support for any of the three forms of insurance will have effects on the others, which need to be understood. InsuranceGrass takes an innovative interdisciplinary view and assesses formal, natural and social insurances: on how to cope best with impacts of climate extremes on grasslands, integrating social and natural sciences perspectives and feedbacks between them. Based on this holistic analysis, InsuranceGrass will provide recommendations for policy and insurance design to ensure effective risk-coping of farmers and to enhance sustainable grassland farming, considering economic, environmental and social aspects. Impacts of extreme and compound extreme events on the provision of ecosystem services (e.g. magnitude and quality of yield, climate regulation via carbon sequestration, plant diversity) by permanent grasslands in Germany and Switzerland are quantified based on long-term observations and field experiments. Cutting-edge model-based approaches will be based on behavioural theories and empirically calibrated. With the help of social-ecological modelling, InsuranceGrass explicitly incorporates feedbacks between farmers’ and households’ decision, grassland management options, and ecosystem service provision in a dynamic manner. The contributions of different insurance types are developed, discussed and evaluated jointly with different groups of stakeholders (i.e., farmers, insurance companies, public administration). A scientifically sound and holistic assessment of the role of formal, natural, and social insurances for the sustainability of grassland farming under extreme events requires both disciplinary excellence and seamless interdisciplinary collaboration. InsuranceGrass brings together four groups from Zürich and Leipzig, with unique disciplinary expertise and a track record of successful collaboration.

• DFG Programme: Research Grants
• International Connection: Switzerland
• Cooperation Partners: Professorin Dr. Nina Buchmann; Professor Dr. Robert Finger