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Crop Insurance, Land Allocation, and the Environment

Author

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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), August.
  • Handle: RePEc:ags:jlaare:134289
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    File URL: http://purl.umn.edu/134289
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    References listed on IDEAS

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    1. Teresa Serra & David Zilberman & Jose Gil & Allen Featherstone, 2009. "The effects of decoupling on land allocation," Applied Economics, Taylor & Francis Journals, vol. 41(18), pages 2323-2333.
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    3. V. Eldon Ball & Frank M. Gollop & Alison Kelly-Hawke & Gregory P. Swinand, 1999. "Patterns of State Productivity Growth in the U.S. Farm Sector: Linking State and Aggregate Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 164-179.
    4. Barry K. Goodwin & Monte L. Vandeveer & John L. Deal, 2004. "An Empirical Analysis of Acreage Effects of Participation in the Federal Crop Insurance Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1058-1077.
    5. Houck, James P. & Abel, Martin E. & Ryan, Mary R. & Gallagher, Paul W. & Hoffman, Robert G. & Penn, J. B., 1976. "Analyzing the Impact of Gevernment Programs on Crop Acreage," Staff General Research Papers Archive 12572, Iowa State University, Department of Economics.
    6. Clark P. Bishop & C. Richard Shumway & Philip R. Wandschneider, 2010. "Agent Heterogeneity in Adoption of Anaerobic Digestion Technology: Integrating Economic, Diffusion, and Behavioral Innovation Theories," Land Economics, University of Wisconsin Press, vol. 86(3).
    7. Hayley H. Chouinard & Tobias Paterson & Philip R. Wandschneider & Adrienne M. Ohler, 2008. "Will Farmers Trade Profits for Stewardship? Heterogeneous Motivations for Farm Practice Selection," Land Economics, University of Wisconsin Press, vol. 84(1), pages 66-82.
    8. V. Eldon Ball & Charles Hallahan & Richard Nehring, 2004. "Convergence of Productivity: An Analysis of the Catch-up Hypothesis within a Panel of States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1315-1321.
    9. Atanu Saha & C. Richard Shumway, 1998. "Refutable implications of the firm model under risk," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 441-448.
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    Citations

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    Cited by:

    1. 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;Western Agricultural Economics Association.
    2. 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.
    3. repec:fpr:ifpric:9780896292499-10 is not listed on IDEAS
    4. 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.
    5. 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.
    6. 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;Western Agricultural Economics Association.
    7. 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, Louisville, KY 186643, Agricultural and Applied Economics Association.
    8. Claassen, Roger & Langpap, Christian & Wu, JunJie, 2015. "Impacts of Federal Crop Insurance on Land Use and Environmental Quality," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205340, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    9. 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, October 8-9, Louisville, KY 156945, Agricultural and Applied Economics Association.

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