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Potential Budgetary Impacts of Climate Change on the Pasture, Rangeland, and Forage Insurance Plan

Author

Listed:
  • Turner, Dylan
  • Baldwin, Katherine
  • Beckman, Jayson
  • Nava, Noé J.
  • Tsiboe, Francis
  • Vaiknoras, Kate

Abstract

More frequent and severe weather events are projected with climate change. The U.S. Federal Government offers programs to help producers mitigate the financial impacts of these adverse events, the largest of which is the USDA, Federal Crop Insurance Program (FCIP). The potential impacts on FCIP outlays under future climate scenarios have been explored but most analyses have focused on impacts on field crops. A changing climate could also affect forage commodities and livestock producers. The Pasture, Rangeland, and Forage (PRF) insurance plan was designed to help producers mitigate financial losses associated with a lack of precipitation. Payments are triggered if precipitation is below a historical index. Payment amounts are determined by the decrease in precipitation, changes in biomass value, and participation in the program. This report provides projected changes to precipitation (using climate estimates), biomass (using a livestock rangeland model), and future participation in the program. Results show that net payments (defined as indemnities, plus premium subsidies, minus total premiums) are projected to range from an annual average of approximately $495 million per year to $2.63 billion per year between 2024 and 2050 compared to the average net payments of $603 million per year (in 2024 terms) observed in 2020–23.

Suggested Citation

  • Turner, Dylan & Baldwin, Katherine & Beckman, Jayson & Nava, Noé J. & Tsiboe, Francis & Vaiknoras, Kate, 2024. "Potential Budgetary Impacts of Climate Change on the Pasture, Rangeland, and Forage Insurance Plan," Economic Brief 348571, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerseb:348571
    DOI: 10.22004/ag.econ.348571
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    References listed on IDEAS

    as
    1. Selasco, Eric J. & Hungerford, Ashley E., 2018. "Examining the Design and Use of the Pasture, Rangeland, Forage (PRF) Program," Western Economics Forum, Western Agricultural Economics Association, vol. 16(2), December.
    2. Beckman, Jayson & Dong, Fengxia & Ivanic, Maros & Jägermeyr, Jonas & Villoria, Nelson, 2024. "Climate-Induced Yield Changes and TFP: How Much R&D Is Necessary to Maintain the Food Supply?," Economic Research Report 344129, United States Department of Agriculture, Economic Research Service.
    3. Beckman, Jayson & Ivanic, Maros & Nava, Noé J., 2023. "Estimating Market Implications from Corn and Soybean Yields Under Climate Change in the United States," Economic Research Report 338944, United States Department of Agriculture, Economic Research Service.
    4. Turner, Dylan & Tsiboe, Francis & Baldwin, Katherine & Williams, Brian & Dohlman, Erik & Astill, Gregory & Skorbiansky, Sharon Raszap & Abadam, Vidalina & Yeh, D. Adeline & Knight, Russell, 2023. "Federal Programs for Agricultural Risk Management," Economic Information Bulletin 340216, United States Department of Agriculture, Economic Research Service.
    5. Hrozencik, R. Aaron & Perez-Quesada, Gabriela & Bocinsky, Kyle, 2024. "The Stocking Impact and Financial-Climate Risk of the Livestock Forage Disaster Program," Economic Research Report 340568, United States Department of Agriculture, Economic Research Service.
    6. Jesse Tack & Keith Coble & Barry Barnett, 2018. "Warming temperatures will likely induce higher premium rates and government outlays for the U.S. crop insurance program," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 635-647, September.
    7. Tsiboe, Francis & Turner, Dylan, 2023. "The crop insurance demand response to premium subsidies: Evidence from U.S. Agriculture," Food Policy, Elsevier, vol. 119(C).
    8. Vaiknoras, Kate & Kiker, Greg & Nkonya, Ephraim & Morgan, Savannah & Beckman, Jayson & Johnson, Michael E. & Ivanic, Maros, 2024. "The Effect of Climate Change on Herbaceous Biomass and Implications for Global Cattle Production," Economic Research Report 347200, United States Department of Agriculture, Economic Research Service.
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