How to fight against southern pine beetle epidemics: An insurance approach

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  • Authors: Chen, Xuan; Goodwin, Barry K.; Prestemon, Jeffrey P.
  • Publication Year: 2019
  • Publication Series: Scientific Journal (JRNL)
  • Source: Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie
  • DOI: 10.1111/cjag.12186

Abstract

The southern pine beetle (SPB) is among the leading biological agents killing southern pine species in the eastern United States. In light of recognized spatiotemporal autocorrelation in SPB outbreaks, we devise a spatiotemporal block bootstrapping method that can be applied to analyze spatiotemporally dependent infestations. We also identify the relevant risk determinants and evaluate their impacts on the frequency of SPB outbreaks. For example, we find forest type, climate, and natural disasters like storm and forest management are all significantly associated with SPB risks. Using the results of a statistical model, we design a county-level group index insurance plan that generates estimates of actuarially fair premium rates for timber stands containing southern pine species. Given that no government-provided compensation scheme for SPB epidemics currently exists, application of this new insurance product could reduce forest owners losses. Our study offers an approach to analyzing and protecting against risks of other destructive pests affecting the timber sector.

  • Citation: Chen, Xuan; Goodwin, Barry K.; Prestemon, Jeffrey P. 2019. How to fight against southern pine beetle epidemics: An insurance approach. Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie. 67(2): 193-213. https://doi.org/10.1111/cjag.12186.
  • Keywords: index insurance, southern pine beetle, timber, spatiotemporal correlation
  • Posted Date: May 28, 2019
  • Modified Date: May 30, 2019

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