IDEAS home Printed from https://ideas.repec.org/p/ags/aaea22/324776.html

Do Cover Crops Reduce Production Risk?

Author

Listed:
  • Aglasan, Serkan
  • Rejesus, Roderick M.

Abstract

This study examines whether cover crop adoption reduces production risk. A crop insurance loss measure is used as the main measure of downside production risk. To achieve this objective, we utilize a county-level panel data set with information on cover crop adoption rate, crop insurance production losses, and weather variables. The data covers the main corn and soybean production regions in the Midwestern United States (US) for the period 2005 to 2018. We employ linear fixed effects econometric models and a number of robustness checks in the empirical analysis (i.e., including a fractional regression approach, recently developed instrumental variable procedures, and alternative empirical specifications). The estimation methods used take advantage of the panel nature of the data to address various specification and endogeneity issues. Our estimation results suggest that counties with higher cover crop adoption tend to have lower crop insurance losses (and thus have lower downside production risk).

Suggested Citation

  • Aglasan, Serkan & Rejesus, Roderick M., 2022. "Do Cover Crops Reduce Production Risk?," 2022 Annual Meeting, July 31-August 2, Anaheim, California 324776, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea22:324776
    DOI: 10.22004/ag.econ.324776
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/324776/files/Do%20Cover%20Crops%20Reduce%20Production%20Risk-AAEA-2022.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.324776?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    2. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    3. Christopher F Baum & Arthur Lewbel, 2019. "Advice on using heteroskedasticity-based identification," Stata Journal, StataCorp LLC, vol. 19(4), pages 757-767, December.
    4. Wolfram Schlenker & Michael J. Roberts, 2006. "Nonlinear Effects of Weather on Corn Yields," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 391-398.
    5. Ruixue Wang & Roderick M Rejesus & Serkan Aglasan, 2021. "Warming Temperatures, Yield Risk and Crop Insurance Participation [Federal crop insurance and the disincentive to adapt to extreme heat]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(5), pages 1109-1131.
    6. Sebastian Kripfganz & Jan F. Kiviet, 2021. "kinkyreg: Instrument-free inference for linear regression models with endogenous regressors," Stata Journal, StataCorp LLC, vol. 21(3), pages 772-813, September.
    7. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    8. Jan F. Kiviet, 2013. "Identification and inference in a simultaneous equation under alternative information sets and sampling schemes," Econometrics Journal, Royal Economic Society, vol. 16(1), pages 24-59, February.
    9. Edward D. Perry & Jisang Yu & Jesse Tack, 2020. "Using insurance data to quantify the multidimensional impacts of warming temperatures on yield risk," Nature Communications, Nature, vol. 11(1), pages 1-9, December.
    10. Francis Annan & Wolfram Schlenker, 2015. "Federal Crop Insurance and the Disincentive to Adapt to Extreme Heat," American Economic Review, American Economic Association, vol. 105(5), pages 262-266, May.
    11. Wooldridge, Jeffrey M., 2019. "Correlated random effects models with unbalanced panels," Journal of Econometrics, Elsevier, vol. 211(1), pages 137-150.
    12. Riju Joshi & Jeffrey M. Wooldridge, 2019. "Correlated Random Effects Models with Endogenous Explanatory Variables and Unbalanced Panels," Annals of Economics and Statistics, GENES, issue 134, pages 243-268.
    13. Aglasan, Serkan & Goodwin, Barry K. & Rejesus, Roderick, 2020. "Genetically Modified Rootworm-Resistant Corn, Risk, and Weather: Evidence from High Dimensional Methods," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 305181, Agricultural and Applied Economics Association.
    14. Kiviet, Jan F., 2020. "Testing the impossible: Identifying exclusion restrictions," Journal of Econometrics, Elsevier, vol. 218(2), pages 294-316.
    15. Barry K. Goodwin & Nicholas E. Piggott, 2020. "Has Technology Increased Agricultural Yield Risk? Evidence from the Crop Insurance Biotech Endorsement," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1578-1597, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Serkan Aglasan & Roderick M. Rejesus & Stephen Hagen & William Salas, 2024. "Cover crops, crop insurance losses, and resilience to extreme weather events," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1410-1434, August.
    2. 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.
    3. Che, Yuyuan & Aglasan, Serkan & Burchfield, Emily K. & Rejesus, Roderick M., 2025. "The Impact of Crop Insurance Participation on Landscape Complexity," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360700, Agricultural and Applied Economics Association.
    4. Serkan Aglasan & Barry K. Goodwin & Roderick M. Rejesus, 2023. "Risk effects of GM corn: Evidence from crop insurance outcomes and high‐dimensional methods," Agricultural Economics, International Association of Agricultural Economists, vol. 54(1), pages 110-126, January.
    5. Byungyul Park & Roderick M. Rejesus & Serkan Aglasan & Yuyuan Che & Stephen C. Hagen & William Salas, 2023. "Payments from agricultural conservation programs and cover crop adoption," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 984-1007, June.
    6. Wang, Haining & Cheng, Zhiming, 2022. "Kids eat free: School feeding and family spending on education," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 196-212.
    7. Kiviet, Jan F., 2023. "Instrument-free inference under confined regressor endogeneity and mild regularity," Econometrics and Statistics, Elsevier, vol. 25(C), pages 1-22.
    8. Opoku, Eric Evans Osei & Acheampong, Alex O., 2025. "Women's political participation and disease prevention: Evidence from access to water and sanitation services," Social Science & Medicine, Elsevier, vol. 365(C).
    9. Manh Hung Do, 2023. "The Role of Savings and Income Diversification in Households’ Resilience Strategies: Evidence from Rural Vietnam," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 168(1), pages 353-388, August.
    10. Thanh‐Tung Nguyen & Trung Thanh Nguyen & Ulrike Grote, 2023. "Internet use and agricultural productivity in rural Vietnam," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1309-1326, August.
    11. Awaworyi Churchill, Sefa & Asante, Augustine, 2023. "Neighbourhood crime and obesity: Longitudinal evidence from Australia," Social Science & Medicine, Elsevier, vol. 337(C).
    12. Arnd Kölling & Claus Schnabel, 2022. "Owners, external managers and industrial relations in German establishments," British Journal of Industrial Relations, London School of Economics, vol. 60(2), pages 424-443, June.
    13. Makate, Clifton & Angelsen, Arild & Holden, Stein Terje & Westengen, Ola Tveitereid, 2022. "Crops in crises: Shocks shape smallholders' diversification in rural Ethiopia," World Development, Elsevier, vol. 159(C).
    14. Susanne Elsas, 2021. "Causality in the Link between Income and Satisfaction: IV Estimation with Internal Instruments," SOEPpapers on Multidisciplinary Panel Data Research 1143, DIW Berlin, The German Socio-Economic Panel (SOEP).
    15. Dilmaghani, Maryam, 2021. "The gender gap in competitive chess across countries: Commanding queens in command economies," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 425-441.
    16. Awaworyi Churchill, Sefa & Hayward, Mathew & Smyth, Russell & Trinh, Trong-Anh, 2023. "Crime, community social capital and entrepreneurship: Evidence from Australian communities," Journal of Business Venturing, Elsevier, vol. 38(2).
    17. Nirup Menon & Anant Mishra & Shun Ye, 2020. "Beyond Related Experience: Upstream vs. Downstream Experience in Innovation Contest Platforms with Interdependent Problem Domains," Manufacturing & Service Operations Management, INFORMS, vol. 22(5), pages 1045-1065, September.
    18. Nguyen, Trung Thanh & Nguyen, Thanh-Tung & Do, Manh Hung & Rahut, Dil & Nguyen, Duy Linh, 2025. "Remittances, sanitation and child malnutrition in middle-income countries: A case study from rural Northeast Thailand and Central Vietnam," World Development, Elsevier, vol. 190(C).
    19. Mwale, Martin Limbikani & Fintel, Dieter von & Marchetta, Francesca & Smith, Anja & Kamninga, Tony Mwenda, 2021. "The Negative Impact of Farm Input Subsidies on Women's Agency in Malawi's Matrilocal Settlements," 2021 Conference, August 17-31, 2021, Virtual 315041, International Association of Agricultural Economists.
    20. Alex O. Acheampong & Eric Evans Osei Opoku & Niharika Rustagi, 2024. "Gender quota, women in politics, and gender parity in education," Economics and Politics, Wiley Blackwell, vol. 36(3), pages 1223-1260, November.

    More about this item

    Keywords

    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea22:324776. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.