Satellite Data and Machine Learning for Weather Risk Management and Food Security

Risk Analysis, Forthcoming

32 Pages Posted: 25 Sep 2017

See all articles by Enrico Biffis

Enrico Biffis

Imperial College Business School

Erik Chavez

Imperial College London

Date Written: June 1, 2017

Abstract

The increase in frequency and severity of extreme weather events poses challenges for the agricultural sector in developing economies and for food security globally. In this paper, we demonstrate how machine learning can be used to mine satellite data and identify pixel-level optimal weather indices that can be used to inform the design of risk transfers and the quantification of the benefits of resilient production technology adoption. We implement the model to study maize production in Mozambique, and show how the approach can be used to produce country-wide risk profiles resulting from the aggregation of local, heterogeneous exposures to rainfall precipitation and excess temperature. We then develop a framework to quantify the economic gains from technology adoption by using insurance costs as the relevant metric, where insurance is broadly understood as the transfer of weather driven crop losses to a dedicated facility. We consider the case of irrigation in detail, estimating a reduction in insurance costs of at least 30%, which is robust to different configurations of the model. The approach offers a robust framework to understand the costs vs. benefits of investment in irrigation infrastructure, but could clearly be used to explore in detail the benefits of more advanced input packages, allowing for example for different crop varieties, sowing dates, or fertilizers.

Suggested Citation

Biffis, Enrico and Chavez, Erik, Satellite Data and Machine Learning for Weather Risk Management and Food Security (June 1, 2017). Risk Analysis, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3041167

Enrico Biffis (Contact Author)

Imperial College Business School ( email )

Imperial College London
South Kensington campus
London, SW7 2AZ
United Kingdom

Erik Chavez

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

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