Financial Instruments for Managing Climate Risk in Oat, Sorghum, Bean, and Maize Crops: A Feasibility Analysis of a Derivatives Market in Mexico
DOI:
https://doi.org/10.33110/rnee.v21i1.383Keywords:
climate derivatives, agroclimatic risk, agriculture, financial risk management, climate changeAbstract
This study evaluates the feasibility of developing a climate derivatives market for agroclimatic risk management in Mexico, focusing on corn, beans, sorghum, and oats. Using historical SIACON data (2003–2023), a quantitative methodology based on agricultural loss indicators, sensitivity analysis, simplified Monte Carlo simulation, and econometric modelling was applied to identify regional risk profiles and assign differentiated financial instruments. Results reveal significant territorial heterogeneity in the frequency, severity, and volatility of agricultural losses, supporting the use of climate swaps, futures, and options according to regional characteristics. The study concludes that Mexico has initial technical conditions to implement pilot schemes; however, consolidation requires stronger meteorological infrastructure, basis risk reduction, and improved rural financial literacy.
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