Anderson, Jock R.Larson, Donald F.Varangis, Panos2013-12-192013-12-192004-09-01World Bank Research Observerdoi:10.1093/wbro/lkh022https://hdl.handle.net/10986/16411Over the past dozen years, policymakers have largely abandoned long-standing popular approaches for addressing risk in agriculture without fully resolving the question of how best to manage the negative consequences of volatile agricultural markets. The article reviews the transition from past policies and describes current approaches that distinguish between the trade-related fiscal consequences of commodity market volatility and the consequences of price and production risks for vulnerable rural households and communities. Current policies rely more heavily on markets, even though markets for risk are incomplete in numerous ways. The benefits and limitations of market-based instruments are examined in the context of risk management strategies, and innovative approaches to extend the reach of risk markets are discussed.en-USCC BY-NC-ND 3.0 IGOADVERSE EFFECTSADVERSE SELECTIONAGGREGATE DEMANDAGRICULTURAL COMMODITIESAGRICULTURAL ECONOMICSAGRICULTURAL INSURANCEAGRICULTURAL SHOCKSASYMMETRIC INFORMATIONAVERAGE PRICEBANKRUPTCYBENEFICIARIESBENEFICIARYBONDBONDSBORROWINGCAPITAL MARKETSCENTRAL BANKSCERTIFICATE OF DEPOSITCLIMATECOMMERCIAL INSURANCECOMMODITYCOMMODITY EXPORTSCOMMODITY MARKETSCOMMODITY PRICECOMMODITY PRICESCOMMODITY RISK MANAGEMENTCONSUMPTION SMOOTHINGCONTRACT DESIGNCONTRACT DESIGNSCONTRACT ENFORCEMENTCREDIT ASSOCIATIONSCREDIT MARKETSCREDIT SYSTEMSCRISESCROP INSURANCECROP LOSSESCURRENCYDEBT MANAGEMENTDEFAULTSDEPOSITSDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPING ECONOMIESDEVELOPMENT ECONOMICSDEVELOPMENT FINANCEDEVELOPMENT INSTITUTIONSDISASTER INSURANCEDOMESTIC BANKDOMESTIC CREDITDOMESTIC MARKETDOMESTIC MARKETSDOMESTIC PRICESDROUGHT INSURANCEECONOMIC ACTIVITYECONOMIC ANALYSISECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC SYSTEMSECONOMICSEFFICIENT MARKETSEMPLOYMENTENFORCEMENT MECHANISMSEXCHANGE RATEEXCHANGE RATESEXPENDITURESEXPORTERSEXTERNAL DEBTEXTERNAL SHOCKSFARMING HOUSEHOLDSFEASIBILITYFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL MARKETSFINANCING FACILITYFIXED COSTSFORWARD MARKETSFUTURESFUTURES MARKETFUTURES MARKETSGOVERNMENT DEBTGOVERNMENT FINANCINGGOVERNMENT INTERVENTIONGOVERNMENT POLICIESGOVERNMENT REVENUESGOVERNMENT SUBSIDIESGROSS DOMESTIC PRODUCTHEDGE RATIOHOLDINGHUMAN CAPITALILLIQUID MARKETSIMPORTSINCOMEINCOME SHOCKSINCOME VOLATILITYINCOMPLETE MARKETSINDEMNITY PAYMENTINDEMNITY PAYMENTSINFLATIONINSTRUMENTINSURANCE ARRANGEMENTSINSURANCE CONTRACTINSURANCE CONTRACTSINSURANCE INSTRUMENTSINSURANCE MARKETSINSURANCE MECHANISMSINSURANCE POLICIESINSURANCE PRODUCTINSURANCE SCHEMEINSURANCE SCHEMESINSURANCE SYSTEMSINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCEINTERNATIONAL MARKETSINTERNATIONAL TRADINGINVENTORIESINVENTORYINVENTORY COLLATERALINVESTINGISLAND ECONOMIESJOBSLABOR MARKETSLABOR SUPPLYLAND REFORMLIENLINES OF CREDITLIQUIDITYLIVESTOCK INSURANCELIVING STANDARDSLOANLOCAL CURRENCIESLOCAL ECONOMYLOCAL GOVERNMENTSMACROECONOMIC INSTABILITYMACROECONOMIC POLICYMACROECONOMIC STABILIZATIONMARKET ECONOMYMARKET INSTRUMENTSMARKET REFORMMARKET REFORMSMARKET VOLATILITYMINIMUM PRICEMONETARY FUNDMONITORING COSTSMONOPOLIESMORAL HAZARDMULTILATERAL LENDERSMULTIPLE PERIL CROP INSURANCEMUTUAL INSURANCENATIONAL INCOMENATURAL DISASTERNATURAL DISASTERSOPEN ECONOMIESOPTIMAL CONTRACTOPTIONS MARKETSOUTPUTSPARTIAL GUARANTEESPERFORMANCE RISKSPERMANENT INCOME HYPOTHESISPOLITICAL ECONOMYPORTFOLIOPORTFOLIOSPRICE INDEXPRICE INSURANCEPRICE MOVEMENTSPRICE POLICIESPRICE RISKPRICE RISKSPRICE STABILITYPRICE UNCERTAINTYPRICE VOLATILITYPRIMARY MARKETSPRIVATE INVESTMENTPRIVATE INVESTORSPROPERTY RIGHTSPUBLIC INVESTMENTSRELATIVE PRICESREMITTANCESRESERVESRESOURCE ALLOCATIONRESOURCE ECONOMICSRETIREMENTRETURNRISK AVERSIONRISK EXPOSURERISK MANAGEMENTRISK MANAGEMENT STRATEGIESRISK MANAGEMENT TOOLRISK MARKETSRISK SHARINGRURAL CREDITRURAL CREDIT MARKETRURAL FINANCERURAL FINANCE INSTITUTIONSSAFETYSAFETY NETSAFETY NETSSAVINGSSETTLEMENTSEVERE WEATHERSEVERE WEATHER EVENTSSHORT-TERM INSTRUMENTSSMALL BUSINESSESSOCIAL CONFLICTSOCIAL DEVELOPMENTSTATE ENTERPRISESSTOCKSSUBSISTENCE FARMERSSUPPLY SIDETRANSACTIONTRANSACTION COSTSTRANSITION ECONOMIESTREATIESWAREHOUSEWAREHOUSE RECEIPTWAREHOUSE RECEIPT SYSTEMSWAREHOUSE RECEIPTSWAREHOUSESWEATHER DERIVATIVESWEATHER INSURANCEJournal ArticleWorld Bank10.1596/16411