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Risk Management Strategies in Humid Production Regions: A Comparison of Supplemental Irrigation and Crop Insurance

Author

Listed:
  • Dalton, Timothy J.
  • Porter, Gregory A.
  • Winslow, Noah G.

Abstract

Recent federal agricultural programs have accelerated the devolution of enterprise risk management responsibility from the state to individual producers. Using a biophysical simulation model, the risk management benefits of federal crop insurance and supplemental irrigation are derived and compared to uninsured rainfed crop production in an expected utility framework. Federal crop insurance programs are inefficient at reducing producer exposure to weather-related production risk in humid regions, and the risk management benefits from supplemental irrigation are found to be scale and technology dependent. Environmental policies that regulate resource development will increase the investment cost of irrigation alternatives and reduce economic feasibility.

Suggested Citation

  • Dalton, Timothy J. & Porter, Gregory A. & Winslow, Noah G., 2004. "Risk Management Strategies in Humid Production Regions: A Comparison of Supplemental Irrigation and Crop Insurance," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(2), pages 1-13, October.
    • Handle: RePEc:ags:arerjl:31269
    DOI: 10.22004/ag.econ.31269
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    References listed on IDEAS

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    1. Epperson, James E. & Hook, James E. & Mustafa, Yasmin R., 1993. "Dynamic programming for improving irrigation scheduling strategies of maize," Agricultural Systems, Elsevier, vol. 42(1-2), pages 85-101.
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    4. Bernardo, Daniel J., 1988. "The Effect Of Spatial Variability Of Irrigation Applications On Risk-Efficient Irrigation Strategies," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 20(01), pages 1-10, July.
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    Cited by:

    1. Enjolras, Geoffroy & Capitanio, Fabian & Adinolfi, Felice, 2012. "The Demand for Crop Insurance: Combined Approaches for France and Italy," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 13(01), pages 1-18.
    2. Dimitar Nikolov & Sergio Gomez-y-Paloma & Minka Chopeva & Marianne Lefebvre, 2014. "Main Factors of the Development and Attractiveness of the Insurance Market for the Agricultural Companies," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 99-121.
    3. Starr, G.C. & Rowland, D. & Griffin, T.S. & Olanya, O.M., 2008. "Soil water in relation to irrigation, water uptake and potato yield in a humid climate," Agricultural Water Management, Elsevier, vol. 95(3), pages 292-300, March.
    4. Pardey, Philip G. & James, Jennifer S. & Alston, Julian M. & Wood, Stanley & Koo, Bonwoo & Binenbaum, Eran & Hurley, Terrance M. & Glewwe, Paul & Mayer, Jorge & Jones, Richard & De Groote, Hugo & Kana, 2007. "Science, Technology and Skills," Reports 136256, University of Minnesota, International Science and Technology Practice and Policy.
    5. Boyer, Christopher N. & Jensen, Kimberly L. & McLeod, Elizabeth & Larson, James A., 2016. "Upland Cotton Producers’ Willingness to participate in a BMP/STAX Pilot Program," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 234975, Agricultural and Applied Economics Association.
    6. Boyer, Christopher N. & Larson, James A. & Roberts, Roland K. & McClure, Angela T. & Tyler, Donald D. & Smith, S. Aaron, "undated". "Probability of Irrigated Corn Being Profitable in a Humid Region," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162470, Southern Agricultural Economics Association.
    7. Birthal, Pratap S. & Hazrana, Jaweriah & Negi, Digvijay S. & Mishra, Ashok K., 2022. "Assessing benefits of crop insurance vis-a-vis irrigation in Indian agriculture," Food Policy, Elsevier, vol. 112(C).
    8. Trovillion, Alexander P. & Piggott, Nicholas E. & Poole, Chad A., 2026. "The Profitability of Water Management Technologies for Corn Production in North Carolina," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404710, Agricultural and Applied Economics Association.
    9. Buchholz, Matthias & Musshoff, Oliver, 2014. "The role of weather derivatives and portfolio effects in agricultural water management," Agricultural Water Management, Elsevier, vol. 146(C), pages 34-44.
    10. Gill, Tania & Punt, Cecilia, 2010. "The Potential Impact of Increased Irrigation Water Tariffs in South Africa," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96425, African Association of Agricultural Economists (AAAE).
    11. Kemeze, Francis Hypolite, 2018. "The Impact of Agricultural Insurance on the Demand for Supplemental Irrigation: A Randomized Controlled Trial Experimental Evidence in Northern Ghana," Monographs: Applied Economics, AgEcon Search, number 302442.
    12. Enjolras, Geoffroy & Capitanio, Fabian & Aubert, Magali & Adinolfi, Felice, "undated". "Direct payments, crop insurance and the volatility of farm income. Some evidence in France and in Italy," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122478, European Association of Agricultural Economists.
    13. Boyer, Christopher N. & Larson, James A. & Roberts, Roland K. & McClure, Angela T. & Tyler, Donald D., 2014. "The impact of field size and energy cost on the profitability of supplemental corn irrigation," Agricultural Systems, Elsevier, vol. 127(C), pages 61-69.
    14. Pratap S. Birthal & Jaweriah Hazrana & Digvijay S. Negi, 2021. "Effectiveness of Farmers’ Risk Management Strategies in Smallholder Agriculture: Evidence from India," Climatic Change, Springer, vol. 169(3), pages 1-35, December.
    15. Marco Rogna & Günter Schamel & Alex Weissensteiner, 2023. "Modelling the switch from hail insurance to antihail nets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(1), pages 118-136, January.
    16. Sarah C. Sellars & Nathanael M. Thompson & Michael E. Wetzstein & Laura Bowling & Keith Cherkauer & Charlotte Lee & Jane Frankenberger & Ben Reinhart, 2022. "Does crop insurance inhibit climate change technology adoption?," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(3), pages 1-20, March.

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