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Crop Insurance Participation Rates and Asymmetric Effects on U.S. Corn and Soybean Yield Risk

Author

Listed:
  • Connor, Lawson
  • Katchova, Ani L.

Abstract

Crop insurance and its related components, such as premium subsidies, have impacts on farm management decisions, production practices, and output. We use county-level USDA survey data combined with instrumental variables analysis to investigate asymmetric impacts of crop insurance on corn and soybean yield variance. Our results indicate an increase in yield downside risk as crop insurance participation rates increase. We also find an increase in drought susceptibility, likely due to expansion to lower-quality farmland and changes in input use. Increased yield variability could have effects on prices, farm income variability and farmer welfare.

Suggested Citation

  • Connor, Lawson & Katchova, Ani L., 2020. "Crop Insurance Participation Rates and Asymmetric Effects on U.S. Corn and Soybean Yield Risk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 45(1), January.
    • Handle: RePEc:ags:jlaare:298431
    DOI: 10.22004/ag.econ.298431
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    Citations

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    Cited by:

    1. Biram, Hunter D. & Tack, Jesse & Nehring, Richard F., 2022. "Does Crop Insurance Participation Impact Quality-Adjusted Pesticide Usage?," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322136, Agricultural and Applied Economics Association.
    2. Yuqiang Gao & Yongkang Shu & Hongjie Cao & Shuting Zhou & Shaobin Shi, 2021. "Fiscal Policy Dilemma in Resolving Agricultural Risks: Evidence from China’s Agricultural Insurance Subsidy Pilot," IJERPH, MDPI, vol. 18(14), pages 1-11, July.
    3. Chemeris, Anna & Liu, Yong & Ker, Alan P., 2022. "Insurance subsidies, climate change, and innovation: Implications for crop yield resiliency," Food Policy, Elsevier, vol. 108(C).
    4. Daniel Cooley & Steven M. Smith, 2022. "Center Pivot Irrigation Systems as a Form of Drought Risk Mitigation in Humid Regions," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 135-171, National Bureau of Economic Research, Inc.
    5. Richard KOENIG & Marielle BRUNETTE, 2023. "Subjective barriers and determinants to crop insurance adoption," Working Papers of BETA 2023-25, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    6. Lawson Connor & Roderick M. Rejesus & Mahmut Yasar, 2022. "Crop insurance participation and cover crop use: Evidence from Indiana county‐level data," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(4), pages 2181-2208, December.
    7. Che, Yuyuan & Ghosh, Sujit K. & Rejesus, Roderick M., 2022. "Estimating Production Risk Effects with Inequality Constraints," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322189, Agricultural and Applied Economics Association.
    8. Cameron-Harp, Micah & Biram, Hunter D., 2023. "Dynamic treatment effects of crop insurance participation indicate positive impact on agricultural productivity," 2023 Annual Meeting, July 23-25, Washington D.C. 335943, Agricultural and Applied Economics Association.

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