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Crop Insurance, Land Allocation, and the Environment

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  • Walters, Cory G.
  • Shumway, C. Richard
  • Chouinard, Hayley H.
  • Wandschneider, Philip R.

Abstract

Government programs that help agricultural producers manage risk may have environmental consequences. In recent years, premium subsidies for crop insurance have been increased substantially to encourage greater producer participation. Using detailed, producer-level crop insurance contract data in four regions, we investigate whether adverse environmental effects have resulted from these increased subsidies. We find some association between environmental effects and insurance contracts. On average, however, we find that environmental effects are generally small and as often beneficial as adverse. More importantly, we find that results are specific to local conditions and to particular environmental indicators and may be hidden in aggregate analysis.

Suggested Citation

  • Walters, Cory G. & Shumway, C. Richard & Chouinard, Hayley H. & Wandschneider, Philip R., 2012. "Crop Insurance, Land Allocation, and the Environment," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(2), pages 1-20, August.
    • Handle: RePEc:ags:jlaare:134289
    DOI: 10.22004/ag.econ.134289
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    Cited by:

    1. Dolginow, Joseph & Massey, Raymond E. & Myers, Brent & Kitchen, Newell, 2013. "Adjusting Crop Insurance APH Calculation to Accommodate Biomass Production," 2013 AAEA: Crop Insurance and the Farm Bill Symposium 156945, Agricultural and Applied Economics Association.
    2. Alexandre Gohin, 2019. "General Equilibrium Modelling of the Insurance Industry: U.S. Crop Insurance," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(2), pages 108-145, December.
    3. Weber, Jeremy G. & Key, Nigel & O'Donoghue, Erik J., 2015. "Does Federal Crop Insurance Encourage Farm Specialization and Fertilizer and Chemical Use?," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204972, Agricultural and Applied Economics Association.
    4. Ifft, Jennifer & Jodlowski, Margaret, 2018. "Federal crop insurance participation and adoption of sustainable production practices by U.S. farms," SCC-76 Meeting, 2018, April 5-7, Kansas City, Missouri 276148, SCC-76: Economics and Management of Risk in Agriculture and Natural Resources.
    5. Roger Claassen & Christian Langpap & JunJie Wu, 2017. "Impacts of Federal Crop Insurance on Land Use and Environmental Quality," American Journal of Agricultural Economics, John Wiley & Sons, vol. 99(3), pages 592-613, April.
    6. Zheng, Yanan & Goodhue, Rachael E., 2022. "Intensive or Extensive Margin Effects? Growers’ Responses to the Restriction of High-Volatile Organic Compound (VOC) Pesticide Products in the San Joaquin Valley, California," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322085, Agricultural and Applied Economics Association.
    7. Martin Eling & David Pankoke, 2016. "Costs and Benefits of Financial Regulation: An Empirical Assessment for Insurance Companies," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(4), pages 529-554, October.
    8. Möhring, Niklas & Dalhaus, Tobias & Enjolras, Geoffroy & Finger, Robert, 2020. "Crop insurance and pesticide use in European agriculture," Agricultural Systems, Elsevier, vol. 184(C).
    9. Jeremy G. Weber & Nigel Key & Erik O’Donoghue, 2016. "Does Federal Crop Insurance Make Environmental Externalities from Agriculture Worse?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(3), pages 707-742.
    10. Langpap, Christian & Wu, JunJie, 2014. "Impacts of Changes in Federal Crop Insurance Programs on Land Use and Environmental Quality," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY 186643, Agricultural and Applied Economics Association.
    11. Roger Claassen & Christian Langpap & JunJie Wu, 2017. "Impacts of Federal Crop Insurance on Land Use and Environmental Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(3), pages 592-613.
    12. repec:ags:aaea22:335917 is not listed on IDEAS
    13. Sharma, S. & Walters, C., 2018. "Influence of Farm and Lease Type on Crop Insurance Returns," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277399, International Association of Agricultural Economists.
    14. Glauber, Joseph W., 2017. "Agricultural insurance and the WTO:," IFPRI book chapters, in: Bouët, Antoine; Laborde Debucquet, David (ed.), Agriculture, development, and the global trading system: 2000– 2015, chapter 10, International Food Policy Research Institute (IFPRI).
    15. Lu, Xun & Che, Yuyuan & Rejesus, Roderick M. & Goodwin, Barry K. & Ghosh, Sujit K. & Paudel, Jayash, 2023. "Unintended environmental benefits of crop insurance: Nitrogen and phosphorus in water bodies," Ecological Economics, Elsevier, vol. 204(PA).
    16. Aaron De Laporte & Daniel Schuurman & Tristan Skolrud & Peter Slade & Alfons Weersink, 2024. "Business risk management programs and the adoption of beneficial management practices in Canadian crop agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 72(3), pages 309-324, September.
    17. Bigelow, Daniel & Borchers, Allison, 2017. "Major Uses of Land in the United States, 2012," Economic Information Bulletin 263079, United States Department of Agriculture, Economic Research Service.
    18. Sung, Jae-hoon & Miranowski, John A., 2015. "Adaptive Behavior of U.S. Farms to Climate and Risk," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205787, Agricultural and Applied Economics Association.
    19. Ifft, Jennifer & Jodlowski, Margaret, 2018. "Federal crop insurance participation and adoption of sustainable production practices by US corn farms," 166th Seminar, August 30-31, 2018, Galway, West of Ireland 276196, European Association of Agricultural Economists.
    20. Olen, Beau & Wu, Junjie, 2013. "Supply of Insurance for Specialty Crops and its Effect on Yield and Acreage," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150787, Agricultural and Applied Economics Association.
    21. Fabian Capitanio & Antonio De Pin, 2018. "Measures of Efficiency of Agricultural Insurance in Italy, Economic Evaluations," Risks, MDPI, vol. 6(4), pages 1-19, November.
    22. Sloggy, Matthew R. & Hrozencik, R. Aaron & Manning, Dale T. & Goemans, Chris G. & Claassen, Roger L., 2025. "Insurance and extraction incentives in a common pool resource: Evidence from groundwater use in the high plains," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    23. Agnieszka Kurdyś-Kujawska & Agnieszka Sompolska-Rzechuła & Joanna Pawłowska-Tyszko & Michał Soliwoda, 2021. "Crop Insurance, Land Productivity and the Environment: A Way forward to a Better Understanding," Agriculture, MDPI, vol. 11(11), pages 1-17, November.
    24. Feng, Shuaizhang & Han, Yujie & Qiu, Huanguang, 2021. "Does crop insurance reduce pesticide usage? Evidence from China," China Economic Review, Elsevier, vol. 69(C).

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