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Evaluating Changes to Prevented Planting Provision on Moral Hazard

Author

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  • Boyer, Christopher N.
  • Aaron Smith, S.

Abstract

Prevented planting provision in crop insurance protects producers from failure to plant attributable to natural causes. We determined the impact of this provision at various crop insurance coverage levels on prevented planting claims and ex post moral hazard. The moral hazard incentive in the prevented planting provision is stronger for corn than soybeans. Reducing the prevented planting coverage factor for corn could likely reduce moral hazard, but the degree of the reduction will likely depend on the revenue protection coverage level. Conversely, we found moral hazard is unlikely to occur for soybean production regardless of the revenue protection coverage level.

Suggested Citation

  • Boyer, Christopher N. & Aaron Smith, S., 2019. "Evaluating Changes to Prevented Planting Provision on Moral Hazard," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 51(2), pages 315-327, May.
    • Handle: RePEc:cup:jagaec:v:51:y:2019:i:02:p:315-327_00
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    Cited by:

    1. Sunjae Won & Roderick M. Rejesus & Barry K. Goodwin & Serkan Aglasan, 2024. "Understanding the effect of cover crop use on prevented planting losses," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 659-683, March.
    2. Christopher N. Boyer & Eunchun Park & Seong D. Yun, 2023. "Corn and soybean prevented planting acres response to weather," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 970-983, June.

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