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Integrating high resolution soil data into federal crop insurance policy: Implications for policy and conservation

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  • Woodard, Joshua D.

Abstract

Well-designed and executed policies are critical for aligning sustainability incentives and enabling future agricultural productivity growth. In the U.S., government-administered crop insurance is the primary direct mechanism through which agriculture is subsidized and represents over $100 billion in liabilities annually. Despite the importance of soil properties in determining crop yield formation and risk, the Government does not consider any soil information in generating premium rates under the Federal Crop Insurance Program. The purpose of this study is to investigate the potential of integrating high-resolution soil data into modeling of field-level insurance rates in large-scale applications. Here, using the actual distribution of soil quality across crop fields in a high production region, models are developed to incorporate soil data into insurance rates and then evaluated to investigate the magnitude of risk differentials across different soil qualities. These soil-conditioned results were then compared to rates that would have been generated by the Government’s current soil-naïve methodology. This study indicates that the degree to which soils vary within a county is highly significant, leading to rating errors of 200% or greater. Implications of ignoring soil information and operational considerations of modifying this cornerstone program are discussed.

Suggested Citation

  • Woodard, Joshua D., 2016. "Integrating high resolution soil data into federal crop insurance policy: Implications for policy and conservation," Environmental Science & Policy, Elsevier, vol. 66(C), pages 93-100.
    • Handle: RePEc:eee:enscpo:v:66:y:2016:i:c:p:93-100
    DOI: 10.1016/j.envsci.2016.08.011
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    Cited by:

    1. Benjiang Ma & Qing Tang & Yifang Qin & Muhammad Farhan Bashir, 2021. "Policyholder cluster divergence based differential premium in diabetes insurance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1793-1807, October.
    2. Epanchin-Niell, Rebecca S. & Thompson, Alexandra & Han, Xianru & Post, Jessica & Miller, Jarrod & Newburn, David & Gedan, Keryn & Tully, Kate, 2023. "Coastal agricultural land use response to sea level rise and saltwater intrusion," 2023 Annual Meeting, July 23-25, Washington D.C. 335970, Agricultural and Applied Economics Association.
    3. Paloch Suchato & Taro Mieno & Karina Schoengold & Timothy Foster, 2022. "The potential for moral hazard behavior in irrigation decisions under crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 53(2), pages 257-273, March.
    4. Li, Xiaofei & Tack, Jesse B. & Coble, Keith H. & Barnett, Barry J., 2016. "Can Crop Productivity Indices Improve Crop Insurance Rates?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235750, Agricultural and Applied Economics Association.

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