IDEAS home Printed from https://ideas.repec.org/a/ags/jlaare/134289.html
   My bibliography  Save this article

Crop Insurance, Land Allocation, and the Environment

Author

Listed:
  • Walters, Cory G.
  • Shumway, C. Richard
  • Chouinard, Hayley H.
  • Wandschneider, Philip R.

Abstract

Government programs that help agricultural producers manage risk may have environmental consequences. In recent years, premium subsidies for crop insurance have been increased substantially to encourage greater producer participation. Using detailed, producer-level crop insurance contract data in four regions, we investigate whether adverse environmental effects have resulted from these increased subsidies. We find some association between environmental effects and insurance contracts. On average, however, we find that environmental effects are generally small and as often beneficial as adverse. More importantly, we find that results are specific to local conditions and to particular environmental indicators and may be hidden in aggregate analysis.

Suggested Citation

  • Walters, Cory G. & Shumway, C. Richard & Chouinard, Hayley H. & Wandschneider, Philip R., 2012. "Crop Insurance, Land Allocation, and the Environment," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(2), pages 1-20, August.
    • Handle: RePEc:ags:jlaare:134289
    DOI: 10.22004/ag.econ.134289
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/134289/files/pp301-320_Walters.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.134289?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. Houck, James P. & Abel, Martin E. & Ryan, Mary R. & Gallagher, Paul W. & Hoffman, Robert G. & Penn, J. B., 1976. "Analyzing the Impact of Gevernment Programs on Crop Acreage," Staff General Research Papers Archive 12572, Iowa State University, Department of Economics.
    2. Hayley H. Chouinard & Tobias Paterson & Philip R. Wandschneider & Adrienne M. Ohler, 2008. "Will Farmers Trade Profits for Stewardship? Heterogeneous Motivations for Farm Practice Selection," Land Economics, University of Wisconsin Press, vol. 84(1), pages 66-82.
    3. V. Eldon Ball & Charles Hallahan & Richard Nehring, 2004. "Convergence of Productivity: An Analysis of the Catch-up Hypothesis within a Panel of States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1315-1321.
    4. Teresa Serra & David Zilberman & Jose Gil & Allen Featherstone, 2009. "The effects of decoupling on land allocation," Applied Economics, Taylor & Francis Journals, vol. 41(18), pages 2323-2333.
    5. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    6. Jean-Paul Chavas & Matthew T. Holt, 1990. "Acreage Decisions Under Risk: The Case of Corn and Soybeans," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 529-538.
    7. V. Eldon Ball & Frank M. Gollop & Alison Kelly-Hawke & Gregory P. Swinand, 1999. "Patterns of State Productivity Growth in the U.S. Farm Sector: Linking State and Aggregate Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 164-179.
    8. Barry K. Goodwin & Monte L. Vandeveer & John L. Deal, 2004. "An Empirical Analysis of Acreage Effects of Participation in the Federal Crop Insurance Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1058-1077.
    9. Clark P. Bishop & C. Richard Shumway & Philip R. Wandschneider, 2010. "Agent Heterogeneity in Adoption of Anaerobic Digestion Technology: Integrating Economic, Diffusion, and Behavioral Innovation Theories," Land Economics, University of Wisconsin Press, vol. 86(3).
    10. Atanu Saha & C. Richard Shumway, 1998. "Refutable implications of the firm model under risk," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 441-448.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:ags:aaea22:335917 is not listed on IDEAS
    2. Sharma, S. & Walters, C., 2018. "Influence of Farm and Lease Type on Crop Insurance Returns," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277399, International Association of Agricultural Economists.
    3. Lu, Xun & Che, Yuyuan & Rejesus, Roderick M. & Goodwin, Barry K. & Ghosh, Sujit K. & Paudel, Jayash, 2023. "Unintended environmental benefits of crop insurance: Nitrogen and phosphorus in water bodies," Ecological Economics, Elsevier, vol. 204(PA).
    4. Martin Eling & David Pankoke, 2016. "Costs and Benefits of Financial Regulation: An Empirical Assessment for Insurance Companies," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(4), pages 529-554, October.
    5. Bigelow, Daniel & Borchers, Allison, 2017. "Major Uses of Land in the United States, 2012," Economic Information Bulletin 263079, United States Department of Agriculture, Economic Research Service.
    6. Sung, Jae-hoon & Miranowski, John A., 2015. "Adaptive Behavior of U.S. Farms to Climate and Risk," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205787, Agricultural and Applied Economics Association.
    7. Agnieszka Kurdyś-Kujawska & Agnieszka Sompolska-Rzechuła & Joanna Pawłowska-Tyszko & Michał Soliwoda, 2021. "Crop Insurance, Land Productivity and the Environment: A Way forward to a Better Understanding," Agriculture, MDPI, vol. 11(11), pages 1-17, November.
    8. Roger Claassen & Christian Langpap & JunJie Wu, 2017. "Impacts of Federal Crop Insurance on Land Use and Environmental Quality," American Journal of Agricultural Economics, John Wiley & Sons, vol. 99(3), pages 592-613, April.
    9. Ifft, Jennifer & Jodlowski, Margaret, 2018. "Federal crop insurance participation and adoption of sustainable production practices by US corn farms," 166th Seminar, August 30-31, 2018, Galway, West of Ireland 276196, European Association of Agricultural Economists.
    10. Feng, Shuaizhang & Han, Yujie & Qiu, Huanguang, 2021. "Does crop insurance reduce pesticide usage? Evidence from China," China Economic Review, Elsevier, vol. 69(C).
    11. Roger Claassen & Christian Langpap & JunJie Wu, 2017. "Impacts of Federal Crop Insurance on Land Use and Environmental Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(3), pages 592-613.
    12. Olen, Beau & Wu, Junjie, 2013. "Supply of Insurance for Specialty Crops and its Effect on Yield and Acreage," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150787, Agricultural and Applied Economics Association.
    13. Weber, Jeremy G. & Key, Nigel & O'Donoghue, Erik J., 2015. "Does Federal Crop Insurance Encourage Farm Specialization and Fertilizer and Chemical Use?," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204972, Agricultural and Applied Economics Association.
    14. 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).
    15. Langpap, Christian & Wu, JunJie, 2014. "Impacts of Changes in Federal Crop Insurance Programs on Land Use and Environmental Quality," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY 186643, Agricultural and Applied Economics Association.
    16. Fabian Capitanio & Antonio De Pin, 2018. "Measures of Efficiency of Agricultural Insurance in Italy, Economic Evaluations," Risks, MDPI, vol. 6(4), pages 1-19, November.
    17. Dolginow, Joseph & Massey, Raymond E. & Myers, Brent & Kitchen, Newell, 2013. "Adjusting Crop Insurance APH Calculation to Accommodate Biomass Production," 2013 AAEA: Crop Insurance and the Farm Bill Symposium 156945, Agricultural and Applied Economics Association.
    18. Möhring, Niklas & Dalhaus, Tobias & Enjolras, Geoffroy & Finger, Robert, 2020. "Crop insurance and pesticide use in European agriculture," Agricultural Systems, Elsevier, vol. 184(C).
    19. Zheng, Yanan & Goodhue, Rachael E., 2022. "Intensive or Extensive Margin Effects? Growers’ Responses to the Restriction of High-Volatile Organic Compound (VOC) Pesticide Products in the San Joaquin Valley, California," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322085, Agricultural and Applied Economics Association.
    20. 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.
    21. Ifft, Jennifer & Jodlowski, Margaret, 2018. "Federal crop insurance participation and adoption of sustainable production practices by U.S. farms," SCC-76 Meeting, 2018, April 5-7, Kansas City, Missouri 276148, SCC-76: Economics and Management of Risk in Agriculture and Natural Resources.
    22. Alexandre Gohin, 2019. "General Equilibrium Modelling of the Insurance Industry: U.S. Crop Insurance," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(2), pages 108-145, December.

    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. Liu, Yucan & Shumway, C. Richard, 2005. "Indirect Utility Maximization under Risk: A Heterogeneous Panel Application," 2005 Annual Meeting, July 6-8, 2005, San Francisco, California 36307, Western Agricultural Economics Association.
    2. Qiujie Zheng & C. Richard Shumway, 2008. "Washington Biofuel Feedstock Crop Supply Analysis," Working Papers 2008-24, School of Economic Sciences, Washington State University.
    3. Burns, Christopher & Prager, Daniel, "undated". "Do Direct Payments and Crop Insurance Influence Commercial Farm Survival and Decisions to Expand?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235693, Agricultural and Applied Economics Association.
    4. Konrad, Maria Theresia & Nielsen, Helle Ørsted & Pedersen, Anders Branth & Elofsson, Katarina, 2019. "Drivers of Farmers' Investments in Nutrient Abatement Technologies in Five Baltic Sea Countries," Ecological Economics, Elsevier, vol. 159(C), pages 91-100.
    5. Kotakou, Christina A. & Katranidis, Stelios D., 2010. "Evaluating the Effects of Decoupled Payments under Output and Price Uncertainty," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91753, Agricultural Economics Society.
    6. Yucan Liu & C. Richard Shumway & Robert Rosenman & Virgil Eldon Ball, 2011. "Productivity growth and convergence in US agriculture: new cointegration panel data results," Applied Economics, Taylor & Francis Journals, vol. 43(1), pages 91-102.
    7. Czap, Natalia V. & Czap, Hans J. & Khachaturyan, Marianna & Lynne, Gary D. & Burbach, Mark, 2012. "Walking in the shoes of others: Experimental testing of dual-interest and empathy in environmental choice," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 642-653.
    8. Andersen, Matthew A. & Alston, Julian M. & Pardey, Philip G., 2009. "Capital Service Flows: Concepts and Comparisons of Alternative Measures in U.S. Agriculture," Staff Papers 50098, University of Minnesota, Department of Applied Economics.
    9. Claassen, Roger & Carriazo, Fernando & Cooper, Joseph C. & Hellerstein, Daniel & Ueda, Kohei, 2011. "Grassland to Cropland Conversion in the Northern Plains: The Role of Crop Insurance, Commodity, and Disaster Programs," Economic Research Report 262239, United States Department of Agriculture, Economic Research Service.
    10. Liu, Yucan & Shumway, C. Richard, 2005. "Empirical Tests of the Refutable Implications of Expected Utility Maximization under Risk," 2005 Annual meeting, July 24-27, Providence, RI 19331, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Woodard, Joshua D. & Chiu Verteramo, Leslie & Miller, Alyssa P., 2015. "Adaptation of U.S. Agricultural Production to Drought and Climate Change," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205903, Agricultural and Applied Economics Association.
    12. Basnet, Shyam Kumar & Jansson , Torbjorn & Heckelei, Thomas, 2021. "A Bayesian econometrics and risk programming approach for analysing the impact of decoupled payments in the European Union," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(03), January.
    13. Njuki, Eric, 2020. "Examining the effects of federal crop insurance premium subsidies on allocative and technical inefficiency in the U.S. cornbelt," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304285, Agricultural and Applied Economics Association.
    14. Fred Mawunyo Dzanku, 2018. "Rational But Poor? An Explanation for Rural Economic Livelihood Strategy," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 365-381, June.
    15. Sulemana, Iddisah & James, Harvey S., 2014. "Farmer identity, ethical attitudes and environmental practices," Ecological Economics, Elsevier, vol. 98(C), pages 49-61.
    16. Cong, Rong-Gang & Hedlund, Katarina & Andersson, Hans & Brady, Mark, 2014. "Managing soil natural capital: An effective strategy for mitigating future agricultural risks," MPRA Paper 112155, University Library of Munich, Germany.
    17. Amin Mugera & Michael Langemeier & Allen Featherstone, 2012. "Labor productivity convergence in the Kansas farm sector: a three-stage procedure using data envelopment analysis and semiparametric regression analysis," Journal of Productivity Analysis, Springer, vol. 38(1), pages 63-79, August.
    18. Ball, V.E. & Färe, R. & Grosskopf, S. & Margaritis, D., 2015. "The role of energy productivity in U.S. agriculture," Energy Economics, Elsevier, vol. 49(C), pages 460-471.
    19. Jean McGuire & Lois Morton & Alicia Cast, 2013. "Reconstructing the good farmer identity: shifts in farmer identities and farm management practices to improve water quality," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 30(1), pages 57-69, March.
    20. Shumway, C. Richard & Liu, Yucan, 2006. "Induced Innovation in the Agricultural Sector: Evidence From a State Panel," 2006 Annual meeting, July 23-26, Long Beach, CA 21089, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    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:jlaare:134289. 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/waeaaea.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.