Do Direct Payments Influence Farmers' Hail Insurance Decisions?
AbstractWe analyze determinants of hail insurance use of Swiss farmers, covering the period 1990-2009 using FADN panel data. Mixed effect logistic regression models are estimated to identify the most important farm and farmer characteristics that determine insurance use. In addition, information on local hail risk is taken into account in these models. It shows that larger farms, with specialization on crop production, and with larger local hail risks are more likely to adopt the hail insurance. Moreover, insurance users are usually older and better educated. Since the early 1990s, Swiss agricultural policy has reduced price support and introduced general and ecological direct payments. This has led to a much higher importance of direct payments for farmers’ incomes. We find that this development has contributed to decreasing hail adoption rates in Switzerland in the considered period, due to the insurance and wealth effects of direct payments. Our results indicate that the larger the share of direct payments for total farm revenue, the more subsidies would be required to induce hail insurance adoption. Thus, agricultural policy should explicitly consider this interdependency.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114355.
Date of creation: 2011
Date of revision:
Risk and Uncertainty;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-10-15 (Agricultural Economics)
- NEP-ALL-2011-10-15 (All new papers)
- NEP-IAS-2011-10-15 (Insurance Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Femenia, Fabienne & Gohin, Alexandre & Carpentier, Alain, 2008.
"The decoupling of farm programs: Revisiting the wealth effect,"
108th Seminar, February 8-9, 2008, Warsaw, Poland
48107, European Association of Agricultural Economists.
- Fabienne Femenia & Alexandre Gohin & Alain Carpentier, 2010. "The Decoupling of Farm Programs: Revisiting the Wealth Effect," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 836-848.
- Bruce J. Sherrick & Peter J. Barry & Paul N. Ellinger & Gary D. Schnitkey, 2004. "Factors Influencing Farmers' Crop Insurance Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 103-114.
- El Benni, Nadja & Mann, Stefan & Lehmann, Bernard, 2011. "Distributional effects of direct payments in Switzerland," 122nd Seminar, February 17-18, 2011, Ancona, Italy 99368, European Association of Agricultural Economists.
- Enjolras, Geoffroy & Sentis, P., 2008.
"The Main Determinants of Insurance Purchase: An Empirical Study on Crop Insurance Policies in France,"
2008 International Congress, August 26-29, 2008, Ghent, Belgium
44395, European Association of Agricultural Economists.
- Geoffroy Enjolras & Patrick Sentis, 2008. "The main determinants of insurance purchase. An empirical study on crop insurance policies in France," Working Papers 08-06, LAMETA, Universtiy of Montpellier, revised Apr 2008.
- Finger, Robert & Lazzarotto, Patrick & Calanca, Pierluigi, 2010. "Bio-economic assessment of climate change impacts on managed grassland production," Agricultural Systems, Elsevier, vol. 103(9), pages 666-674, November.
- Finger, Robert & El Benni, Nadja, 2011. "Farmers’ Adoption of Extensive Wheat Production - Determinants and Implications," 122nd Seminar, February 17-18, 2011, Ancona, Italy 98979, European Association of Agricultural Economists.
- Cabas, Juan H. & Leiva, Akssell J. & Weersink, Alfons, 2008. "Modeling Exit and Entry of Farmers in a Crop Insurance Program," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(1), April.
- Stefan Mann, 2005. "Farm Size Growth and Participation in Agri-environmental Schemes: A Configural Frequency Analysis of the Swiss Case," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(3), pages 373-384.
- Oliver Musshoff & Martin Odening & Wei Xu, 2009. "Management of climate risks in agriculture-will weather derivatives permeate?," Applied Economics, Taylor and Francis Journals, vol. 43(9), pages 1067-1077.
- Olivier Mahul, 2003. "Hedging price risk in the presence of crop yield and revenue insurance," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(2), pages 217-239, June.
- Daniele Simone Torriani & Pierluigi Calanca & Martin Beniston & Jürg Fuhrer, 2008. "Hedging with weather derivatives to cope with climate variability and change in grain maize production," Agricultural Finance Review, Emerald Group Publishing, vol. 68(1), pages 67-81, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.