IDEAS home Printed from https://ideas.repec.org/p/isu/genres/794.html
   My bibliography  Save this paper

Input Demand Under Yield and Revenue Insurance

Author

Listed:
  • Babcock, Bruce A.
  • Hennessy, David A.

Abstract

Previous studies disagree on the effects of insurance on fertilizer application rates. The effect of increased fertilizer on the probability of low yields primarily determines whether fertilizer and insurance are substitutes or complements. The authors estimate conditional distributions of corn yields to determine if the technical relationship between yields and fertilizer supports the hypothesis that insurance increases optimal application rates. Their results indicate no support for this hypothesis. At all nitrogen fertilizer rates and reasonable levels of risk aversion, nitrogen fertilizer and insurance are substitutes, suggesting that those who purchase insurance are likely to decrease nitrogen fertilizer applications.

Suggested Citation

  • Babcock, Bruce A. & Hennessy, David A., 1996. "Input Demand Under Yield and Revenue Insurance," Staff General Research Papers Archive 794, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:794
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Babcock, Bruce A. & Choi, E. Kwan & Feinerman, Eli, 1993. "Risk And Probability Premiums For Cara Utility Functions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(1), pages 1-8, July.
    2. Sherry Wise & Stanley R. Johnson, 1990. "Comparative Analysis of State Regulations for Use of Agricultural Chemicals, A," Center for Agricultural and Rural Development (CARD) Publications 90-wp50, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. John C. Quiggin & Giannis Karagiannis & J. Stanton, 1993. "Crop Insurance And Crop Production: An Empirical Study Of Moral Hazard And Adverse Selection," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 37(2), pages 95-113, August.
    4. Babcock, Bruce A. & Blackmer, Alfred M., 1992. "The Value Of Reducing Temporal Input Nonuniformities," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(2), pages 1-13, December.
    5. Penson, John B. & Taylor, C. Robert, 1992. "United States agriculture and the general economy: Modeling their interface," Agricultural Systems, Elsevier, vol. 39(1), pages 33-66.
    6. Johnson, Stanley R. & Wolcott, Robert & Aradhyula, Satheesh V., 1990. "Coordinating Agricultural and Environmental Policies: Opportunities and Tradeoffs," Staff General Research Papers Archive 279, Iowa State University, Department of Economics.
    7. Musser, Wesley N. & Tew, Bernard V., 1984. "Use Of Biophysical Simulation In Production Economics," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 16(1), pages 1-10, July.
    8. James S. Shortle & James W. Dunn, 1986. "The Relative Efficiency of Agricultural Source Water Pollution Control Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 668-677.
    9. William W. Wilson & Hung-Gay Fung, 1991. "Put-Call Parity and Arbitrage Bounds for Options on Grain Futures," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(1), pages 55-65.
    10. John K. Horowitz & Erik Lichtenberg, 1993. "Insurance, Moral Hazard, and Chemical Use in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 926-935.
    11. Harvey Lapan & Giancarlo Moschini, 1994. "Futures Hedging Under Price, Basis, and Production Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 465-477.
    12. Erik Lichtenberg & David Zilberman, 1986. "The Econometrics of Damage Control: Why Specification Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(2), pages 261-273.
    13. Johnson, S R & Wolcott, Robert & Aradhyula, Satheesh V, 1990. "Coordinating Agricultural and Environmental Policies: Opportunities and Tradeoffs," American Economic Review, American Economic Association, vol. 80(2), pages 203-207, May.
    14. Black, Fischer, 1976. "The pricing of commodity contracts," Journal of Financial Economics, Elsevier, vol. 3(1-2), pages 167-179.
    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. Arora, Gaurav & Agarwal, Sandip K., 2020. "Agricultural input use and index insurance adoption: Concept and evidence," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304508, Agricultural and Applied Economics Association.
    2. Mitchell, Paul D. & Hurley, Terrance M. & Babcock, Bruce A. & Hellmich, Richard L., 2002. "Insuring The Stewardship Of Bt Corn: 'A Carrot' Versus 'A Stick'," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(2), pages 1-16, December.
    3. Mitchell, Paul David, 1999. "The theory and practice of green insurance: insurance to encourage the adoption of corn rootworm IPM," ISU General Staff Papers 1999010108000013154, Iowa State University, Department of Economics.
    4. Lakshminarayan, P. G., 1993. "Tradeoffs in balancing multiple objectives of an integrated agricultural economic and environmental system," ISU General Staff Papers 1993010108000011833, Iowa State University, Department of Economics.
    5. Sanglestsawai, Santi & Rodriguez, Divina Gracia P. & Rejesus, Roderick M. & Yorobe, Jose M., 2017. "Production Risk, Farmer Welfare, and Bt Corn in the Philippines," Agricultural and Resource Economics Review, Cambridge University Press, vol. 46(3), pages 507-528, December.
    6. Hurley, Terrance M. & Mitchell, Paul D. & Rice, Marlin E., 2001. "What Is The Value Of Bt Corn?," 2001 Annual meeting, August 5-8, Chicago, IL 20476, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Tang, Lin & Luo, Xiaofeng, 2021. "Can agricultural insurance encourage farmers to apply biological pesticides? Evidence from rural China," Food Policy, Elsevier, vol. 105(C).
    8. Yang, Juan & Mitchell, Paul D. & Gray, Michael & Steffey, Kevin, 2007. "Unbalanced Nested Component Error Model and the Value of Soil Insecticide and Bt Corn for Controlling Western Corn Rootworm," Staff Paper Series 510, University of Wisconsin, Agricultural and Applied Economics.
    9. Cai, Rong & Ma, Jie & Wang, shujuan & Cai, Shukai, 2024. "Can crop insurance help optimize farmers’ decisions on pesticides use? Evidence from family farms in East China," Journal of Asian Economics, Elsevier, vol. 92(C).
    10. Serra, Teresa & Zilberman, David & Goodwin, Barry K. & Featherstone, Allen M., 2005. "Effects of Decoupling on the Average and the Variability of Output," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24601, European Association of Agricultural Economists.
    11. Yu, Jisang & Hendricks, Nathan P., 2017. "Crop Insurance Moral Hazard from Price and Weather Forecasts," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258336, Agricultural and Applied Economics Association.
    12. Coleman, Jane A. & Shaik, Saleem, 2009. "Time-Varying Estimation of Crop Insurance Program in Altering North Dakota Farm Economic Structure," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49516, Agricultural and Applied Economics Association.
    13. Glauber, Joseph W., 2017. "Agricultural insurance and the WTO:," IFPRI book chapters, in: Bouët, Antoine & Laborde Debucquet, David (ed.), Agriculture, development, and the global trading system: 2000– 2015, chapter 10, International Food Policy Research Institute (IFPRI).
    14. He, Juan & Zheng, Xiaoyong & Rejesus, Roderick & Yorobe, Jose Jr, 2016. "Estimating the Effect of Crop Insurance on Input Use When Insured Farmers are Monitored," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235225, Agricultural and Applied Economics Association.
    15. Paulson, Nicholas D. & Babcock, Bruce A., 2010. "Readdressing the Fertilizer Problem," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), pages 1-17, December.
    16. Babcock, Bruce A. & Shogren, Jason F., 1995. "The cost of agricultural production risk," Agricultural Economics, Blackwell, vol. 12(2), pages 141-150, August.
    17. Elsa Martin & Hubert Stahn, 2013. "Potential Conflict and Inefficiencies Arising in Agri-environmental Management," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(2), pages 423-445, June.
    18. Jeremy G. Weber & Nigel Key & Erik O’Donoghue, 2016. "Does Federal Crop Insurance Make Environmental Externalities from Agriculture Worse?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(3), pages 707-742.
    19. He, Juan & Zheng, Xiaoyong & Rejesus, Roderick M. & Yorobe Jr., Jose M., 2019. "Moral hazard and adverse selection effects of cost-of-production crop insurance: evidence from the Philippines," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(1), January.
    20. Seo, Sangtaek & Mitchell, Paul D. & Leatham, David J., 2004. "Effects Of Federal Risk Management Programs On Land Allocation And Input Use," 2004 Annual meeting, August 1-4, Denver, CO 20160, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    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:isu:genres:794. 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: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.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.