Abstract

ALFONSE, Allou Allou; TREJO GARCIA, José Carlos  and  MARTINEZ GARCIA, Miguel Ángel. Climate Option of Coffee Production in Mexico. Ens. Rev. econ. [online]. 2018, vol.37, n.2, pp.135-154. ISSN 2448-8402.  https://doi.org/10.29105/ensayos37.2-1.

This paper presents weather derivatives as a tool for the agricultural sector in Mexico to protect itself from climatic risks. An analysis of the need for a climate derivative for the cultivation of coffee in the states of Veracruz, Chiapas and Oaxaca in order to propose a derivative for transferring risk associated with climate. Therefore, it was determined using the data panel method that precipitation has a 1.99 elastic relationship with the annual production of coffee. On the basis of this argument, a valuation is developed in this study of European options related to precipitation and coffee using the Black-Scholes method (1973) for the states mentioned.

Keywords : Climatic Option; Weather Derivatives; Coffee Production.

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