IDEAS home Printed from https://ideas.repec.org/p/ags/aaea26/404357.html

Coverage Level Substitution After the Elimination of Prevented Planting Buy-Up

Author

Listed:
  • Chakravorty, Rwit
  • Tsiboe, Francis
  • Zhao, Hongxi

Abstract

This paper examines whether and to what extent producers substitute higher coverage levels for the loss of targeted prevented planting (PP) buy-up protection. We focus on the effect of the 2018 elimination of the 10% PP buy-up option, which preceded the Expanding Access to Risk Protection (EARP) rule's that completed the elimination of the remaining PP buy-up option beginning with the 2027 commodity year. Using policy-level administrative data from the USDA Risk Management Agency covering 2013–2024, we implement a difference-in-differences framework with farm and commodity-by-year fixed effects, supplemented by entropy balancing to address pre-existing differences between farms that elected the 10% buy-up (treated) and those that used base coverage only (control). Our preferred specification, focusing on corn and soybeans where pre-treatment parallel trends hold most cleanly, estimates that treated farms increased coverage levels by approximately 0.04 percentage points on average relative to control farms. This aggregate estimate masks substantial heterogeneity: farms with more than 10 percentage points of room below the 85% coverage ceiling increased coverage by 0.45 percentage points, while farms already at or near the ceiling show no positive response. The dynamic response is gradual and concentrated in 2020, a year of historically severe prevented planting losses following the record 2019 PP season, consistent with deliberate risk management substitution. Heterogeneity-robust estimators (Sun-Abraham, Callaway-Sant’Anna) confirm a positive and significant treatment effect, with the Sun-Abraham interaction-weighted estimate of 0.43 percentage points reflecting the concentrated post-treatment response more accurately than the TWFE average. These findings suggest that coverage-level substitution occurs where mechanically possible but is insufficient to fully compensate for the loss of targeted PP protection for a large share of the program population.

Suggested Citation

  • Chakravorty, Rwit & Tsiboe, Francis & Zhao, Hongxi, 2026. "Coverage Level Substitution After the Elimination of Prevented Planting Buy-Up," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404357, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea26:404357
    DOI: 10.22004/ag.econ.404357
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/404357/files/177468_194579_115232_fcip_pp_draft_0601_rcft.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.404357?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. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    2. Joseph W. Glauber, 2013. "The Growth Of The Federal Crop Insurance Program, 1990--2011," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 482-488.
    3. Hainmueller, Jens, 2012. "Entropy Balancing for Causal Effects: A Multivariate Reweighting Method to Produce Balanced Samples in Observational Studies," Political Analysis, Cambridge University Press, vol. 20(1), pages 25-46, January.
    4. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    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. Martin Huber, 2019. "An introduction to flexible methods for policy evaluation," Papers 1910.00641, arXiv.org.
    2. Cicchiello, Antonella Francesca & Foroni, Cristian & Monferrà, Stefano & Torluccio, Giuseppe, 2025. "Do FinTech Acquisitions Affect Banks' ESG Performance? Evidence from Global M&As," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 105(C).
    3. Hjalmarsson, Linn & Kaiser, Boris & Bischof, Tamara, 2023. "The impact of physician exits in primary care: A study of practice handovers," Health Policy, Elsevier, vol. 135(C).
    4. Caldeira, Thiago Costa Monteiro & Ehrl, Philipp & Moreira, Tito Belchior Silva, 2023. "Fiscal decentralization and tax collection: evidence from the rural property tax in Brazil," European Journal of Political Economy, Elsevier, vol. 78(C).
    5. Cao, June & Huang, Zijie & Kristanto, Ari Budi, 2025. "From bytes to blooms: Tech-driven transformation and green revenues," Energy Economics, Elsevier, vol. 144(C).
    6. Rabab Abouarab & Tapas Mishra & Simon Wolfe, 2025. "Spotting Portfolio Greenwashing in Environmental Funds," Journal of Business Ethics, Springer, vol. 197(4), pages 811-839, April.
    7. Pilar Beneito & Maria Garcia-Vega & Oscar Vicente-Chirivella & Guillaume Wilemme, 2024. "Robots and firms’ labour search: The role of temporary work agencies," Discussion Papers 2024-02, University of Nottingham, GEP.
    8. Jiang, Hongli & Hu, Wenjie & Hou, Yan & Jiang, Pengcheng & Lu, Na, 2025. "Green fiscal policies, economic growth target constraints and carbon emission efficiency: Evidence from DID and double machine learning," Energy, Elsevier, vol. 339(C).
    9. Zhang, Renjie & Zhu, Guiyi, 2024. "Green public procurement and firms' pollution emissions: Does demand-side environmental policy matter?," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1958-1978.
    10. Müller, Tobias & Schmid, Christian & Gerfin, Michael, 2023. "Rents for Pills: Financial incentives and physician behavior," Journal of Health Economics, Elsevier, vol. 87(C).
    11. André A. Castro & Philipp Ehrl, 2025. "Lean on me, firm: evidence from a management consulting program," Small Business Economics, Springer, vol. 65(1), pages 61-78, June.
    12. Cheick Camara, 2023. "Gender Budgeting and Health Spending Efficiency in Indian States: A Staggered Difference-in-Differences Analysis," CERDI Working papers hal-04294262, HAL.
    13. Xiaoyong Dai & Peichao Guo, 2026. "Policy failure in public support for small business innovation: the case of innovation vouchers in China," Small Business Economics, Springer, vol. 66(1), pages 393-421, January.
    14. Zhang, Linghao & Jin, Xinwei & Wu, Kai, 2025. "How do common institutional investors adapt to early technology adoption?," Journal of Business Research, Elsevier, vol. 199(C).
    15. Partha Deb & Anjelica Gangaram, 2024. "The effects of school shootings on risky behavior, health, and human capital," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(1), pages 1-28, March.
    16. Johanna Muffert & Regina T. Riphahn, 2026. "Long-Run Career Outcomes of Multiple Job Holding," ILR Review, Cornell University, ILR School, vol. 79(1), pages 114-141, January.
    17. Abagna, Matthew Amalitinga, 2023. "Special Economic Zones and Local Economic Activities in Ethiopia," MPRA Paper 117427, University Library of Munich, Germany.
    18. Liang, Shuang, 2025. "Bank competition, market concentration and innovation: Insights from China’s patent pledge financing policy," Finance Research Letters, Elsevier, vol. 82(C).
    19. Michele Ubaldi & Matteo Picchio, 2024. "In the wrong place at the wrong time. The impact of mass shooting exposure on mental health," Working Papers 491, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    20. Jha, Chandan Kumar & Joshi, Swarup, 2023. "Municipal bankruptcies and crime," International Review of Financial Analysis, Elsevier, vol. 89(C).

    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:aaea26:404357. 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.