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The subsidy-mosaic for agricultural weather insurance in Germany

Author

Listed:
  • Schmitt, Jonas
  • Offermann, Frank
  • Finger, Robert

Abstract

The subsidisation of agricultural weather insurance is gaining momentum in European agriculture, with the aim of increasing farmers' self-responsibility and eliminating the need for ad hoc disaster payments. The implementation and design of agricultural weather insurance subsidies vary considerably from country to country. We show here that in Germany there are even fundamental differences within the country due to the different weather insurance subsidy schemes of the federal states. For example, some federal states do not subsidise weather insurance, and other federal states that do subsidise weather insurance, differ in which crops or perils are supported. This insurance subsidy mosaic increases inequality across farms and is likely to increase the cost of insurance. In addition, small federal-state-specific insurance markets are less attractive to insurance companies, which has a negative impact on competition among insurance companies and innovation in insurance products. We conclude that harmonised approaches to insurance support that incentivise on-farm risk management and adaptation to climate change are needed.

Suggested Citation

  • Schmitt, Jonas & Offermann, Frank & Finger, Robert, 2025. "The subsidy-mosaic for agricultural weather insurance in Germany," Agricultural Systems, Elsevier, vol. 225(C).
  • Handle: RePEc:eee:agisys:v:225:y:2025:i:c:s0308521x25000290
    DOI: 10.1016/j.agsy.2025.104289
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    References listed on IDEAS

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    1. Robert Finger & Nadja El Benni, 2021. "Farm income in European agriculture: new perspectives on measurement and implications for policy evaluation," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(2), pages 253-265.
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    4. Jonas Schmitt & Frank Offermann & Andreia F. S. Ribeiro & Robert Finger, 2024. "Drought risk management in agriculture: A copula perspective on crop diversification," Agricultural Economics, International Association of Agricultural Economists, vol. 55(5), pages 823-847, September.
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    6. Barry Smit & Mark Skinner, 2002. "Adaptation options in agriculture to climate change: a typology," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 7(1), pages 85-114, March.
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