Fig. 4: Fund solvency for different policy levers.

The solvency probability of the contingency fund is depicted as a function of the reliability target for food production. Increasing the reliability target results in a growing food production, and the corresponding growing contributions to the fund can be observed as a main trend of increasing solvency probabilities with higher reliability targets. However, when the available arable land is entirely cultivated, substitution from more profitable crops to less profitable but higher yielding crops can result in decreasing contributions into the fund, and correspondingly lower solvency probabilities, as for instance in region G. The risk coverage level has an important effect on the solvency, with less frequent risks leading to higher solvency, notwithstanding the higher payouts necessary to achieve the regional guaranteed income. Annual contributions to the fund also have a sizeable effect on the fund solvency, although solvency probabilities above 90% are mainly achievable for infrequent events (1%) and for annual contributions above 5%. Under these conditions, a solvency probability of 90% can be reached in eight of the nine regions. When annual contributions are below 5% and the covered risk level is higher (5%), the fund solvency probability shows large variations between 36% and 61%.