The Effect of Climate on Crop Insurance Premium Rates and Producer Subsidies
AbstractLikely climate change impacts in the U.S. include damages to agricultural production resulting from increased exposure to extreme heat. However, considerable uncertainty remains regarding impacts on the performance of the Federal Crop Insurance Program. Here we utilized a large panel of corn yield data to predict the effect of a 1oC uniform increase in temperature on premium rates and subsidies for the Group Risk Plan. We found a statistically significant increase in rates, which is primarily driven by increased exposure to extreme heat. These increases induce large increases in subsidy payments, the incidence of which is spread disproportionately across regions.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 149817.
Date of creation: 2013
Date of revision:
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Climate Change; Crop Insurance; Moments; Entropy; Agricultural and Food Policy; Crop Production/Industries; Production Economics; Productivity Analysis; Risk and Uncertainty;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-06-24 (Agricultural Economics)
- NEP-ALL-2013-06-24 (All new papers)
- NEP-ENV-2013-06-24 (Environmental Economics)
- NEP-IAS-2013-06-24 (Insurance Economics)
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