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Risk reduction impacts of crop insurance in the United States

Author

Listed:
  • Francis Tsiboe
  • Dylan Turner
  • Katherine Baldwin
  • Brian Williams
  • Matthew Miller
  • Erik Dohlman

Abstract

The Federal Crop Insurance Program (FCIP) offers insurance policies that reduce the risk of declining farm revenues by increasing mean revenue, decreasing revenue variability, or some combination of both. Using historic data from the FCIP, this paper estimates the effect that different insurance policies have on mean revenue and revenue variability and to what degree indemnity payments are converted into reduced revenue variability. The results suggest that on average, a 1% increase in revenue results in a 2.25% reduction in inter‐crop‐year revenue variability. Most of this effect is found to be attributed to individual revenue and yield protection plans, which are the most participated‐in insurance plans and generally produce simultaneous increases in mean revenue and decreases in revenue variability.

Suggested Citation

  • Francis Tsiboe & Dylan Turner & Katherine Baldwin & Brian Williams & Matthew Miller & Erik Dohlman, 2025. "Risk reduction impacts of crop insurance in the United States," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 47(5), pages 1832-1847, December.
    • Handle: RePEc:wly:apecpp:v:47:y:2025:i:5:p:1832-1847
    DOI: 10.1002/aepp.13513
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    References listed on IDEAS

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    1. Tsiboe, Francis & Turner, Dylan, 2023. "The crop insurance demand response to premium subsidies: Evidence from U.S. Agriculture," Food Policy, Elsevier, vol. 119(C).
    2. Carriker, Gordon L. & Williams, Jeffery R. & Barnaby, Glenn Arthur, Jr. & Black, J. Roy, 1991. "Yield And Income Risk Reduction Under Alternative Crop Insurance And Disaster Assistance Designs," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(2), pages 1-13, December.
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    Cited by:

    1. Tsiboe, Francis & Turner, Dylan, 2025. "Crop Insurance Generally Improves Farm Revenues, But Effects Vary by Policy Type," ARPC Brief 401336, North Dakota State University.

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