The Impact of China's Policy-Based Staple Grain Insurance on the Acreage of Three Staple Grains

Ensuring food security under increasing climate risks has become an important policy challenge. Policy-based agricultural insurance is an important instrument for governments to stabilize agricultural production and enhance farmers' resilience to production risks. China launched policy-based staple grain insurance for rice, corn, and wheat in 2018, covering both full cost insurance and planting income insurance. Based on the staggered implementation of the policy across counties in thirteen major provinces that produce staple grains in China, this paper uses panel data at the county level covering 2010-2023 and employs a staggered difference-in-differences model to estimate the effect of the policy on the acreage of the three staple grains. The policy raises the acreage of the three staple grains of pilot counties by around 8.2 percent, which survives various robustness tests. Extreme climate days positively moderate the policy effect, meaning larger gains in high climate risk regions. The effects are stronger in North China and in counties with less per capita arable land and higher levels of economic development. The findings provide new empirical evidence on how policy-based agricultural insurance promotes land allocation toward staple grain production and have policy implications for food security in developing economies.