IDEAS home Printed from https://ideas.repec.org/a/bla/canjag/v72y2024i3p309-324.html
   My bibliography  Save this article

Business risk management programs and the adoption of beneficial management practices in Canadian crop agriculture

Author

Listed:
  • Aaron De Laporte
  • Daniel Schuurman
  • Tristan Skolrud
  • Peter Slade
  • Alfons Weersink

Abstract

Canada's agricultural business risk management (BRM) programs require significant public expenditure, with unclear consequences related to climate change adaptation and mitigation through the adoption of beneficial management practices (BMPs). This study examines the relationship between Canada's current suite of BRM programs and the adoption of practices that mitigate GHG emissions in crop agriculture. We review the impacts of agricultural insurance on climate adaptation and mitigation, identifying impacts on both the intensive and extensive margins of production. We consider five potential program modifications, including: (1) changes in producer insurance premiums in AgriInsurance for the adoption of practices that would decrease the actuarially fair insurance rate if they were properly incorporated in the calculation; (2) dedicated insurance products related to trials of specific BMPs; (3) adjustments to current programs to allow more whole‐farm considerations and intercropping; (4) cross‐compliance measures on AgriInvest tied to environmental education; and (5) reduced insurance coverage for unfavorable environmental practices. While the effects of these potential modifications remain uncertain, they will drive the data collection process necessary to ensure that Canada's BRM programs play an appropriate role in greenhouse‐gas reducing BMP adoption and climate change adaptation and mitigation. Les programmes de gestion des risques des entreprises agricoles (GRE) du Canada nécessitent des dépenses publiques importantes, avec des conséquences peu claires quant à l'adaptation et à l'atténuation des changements climatiques grâce à l'adoption de pratiques de gestion bénéfiques (PGB). Cette étude examine la relation entre la série actuelle de programmes de GRE du Canada et l'adoption de pratiques qui atténuent les émissions de GES dans les cultures agricoles. Nous examinons les impacts de l'assurance agricole sur l'adaptation et l'atténuation du changement climatique, en identifiant les impacts sur les marges de production intensives et extensives. Nous envisageons cinq modifications potentielles du programme, notamment: 1) des changements dans les primes d'assurance des producteurs dans Agri‐protection pour l'adoption de pratiques qui diminueraient le taux d'assurance actuariellement équitable si elles étaient correctement intégrées dans le calcul; 2) des produits d'assurance dédiés liés aux essais de BMP spécifiques; 3) des ajustements aux programmes actuels pour permettre davantage de considérations globales sur l'exploitation agricole et de cultures intercalaires; 4) les mesures d'écoconditionnalité sur Agri‐investissement liées à l'éducation environnementale; et 5) une couverture d'assurance réduite pour les pratiques environnementales défavorables. Bien que les effets de ces modifications potentielles restent incertains, elles orienteront le processus de collecte de données nécessaire pour garantir que les programmes de GRE du Canada jouent un rôle approprié dans l'adoption de PGB de réduction des gaz à effet de serre et dans l'adaptation et l'atténuation aux changements climatiques.

Suggested Citation

  • Aaron De Laporte & Daniel Schuurman & Tristan Skolrud & Peter Slade & Alfons Weersink, 2024. "Business risk management programs and the adoption of beneficial management practices in Canadian crop agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 72(3), pages 309-324, September.
    • Handle: RePEc:bla:canjag:v:72:y:2024:i:3:p:309-324
    DOI: 10.1111/cjag.12349
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/cjag.12349
    Download Restriction: no
    File URL: https://libkey.io/10.1111/cjag.12349?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. Müller, Birgit & Quaas, Martin F. & Frank, Karin & Baumgärtner, Stefan, 2011. "Pitfalls and potential of institutional change: Rain-index insurance and the sustainability of rangeland management," Ecological Economics, Elsevier, vol. 70(11), pages 2137-2144, September.
    2. Alan P. Ker & Barry Barnett & David Jacques & Tor Tolhurst, 2017. "Canadian Business Risk Management: Private Firms, Crown Corporations, and Public Institutions," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 65(4), pages 591-612, December.
    3. Taro Mieno & Cory G Walters & Lilyan E Fulginiti, 2018. "Input Use under Crop Insurance: The Role of Actual Production History," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1469-1485.
    4. 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.
    5. Daniel J. Clarke, 2016. "A Theory of Rational Demand for Index Insurance," American Economic Journal: Microeconomics, American Economic Association, vol. 8(1), pages 283-306, February.
    6. Ng, Horlick & Ker, Alan P., 2021. "On the Changing Nature of Canadian Crop Yield Distributions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(1), January.
    7. J. Wu & R. M. Adams, 2001. "Production Risk, Acreage Decisions and Implications for Revenue Insurance Programs," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 49(1), pages 19-35, March.
    8. Cabas, Juan H. & Leiva, Akssell J. & Weersink, Alfons, 2008. "Modeling Exit and Entry of Farmers in a Crop Insurance Program," Agricultural and Resource Economics Review, Cambridge University Press, vol. 37(1), pages 92-105, April.
    9. Francis Annan & Wolfram Schlenker, 2015. "Federal Crop Insurance and the Disincentive to Adapt to Extreme Heat," American Economic Review, American Economic Association, vol. 105(5), pages 262-266, May.
    10. Rajsic, Predrag & Weersink, Alfons, 2008. "Do farmers waste fertilizer? A comparison of ex post optimal nitrogen rates and ex ante recommendations by model, site and year," Agricultural Systems, Elsevier, vol. 97(1-2), pages 56-67, April.
    11. 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.
    12. Brett G. Cortus & Scott R. Jeffrey & James R. Unterschultz & Peter C. Boxall, 2011. "The Economics of Wetland Drainage and Retention in Saskatchewan," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 59(1), pages 109-126, March.
    13. 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.
    14. Youngjune Kim & Jisang Yu & Dustin L Pendell, 2020. "Effects of crop insurance on farm disinvestment and exit decisions [Effects of differing farm policies on farm structure and dynamics]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(1), pages 324-347.
    15. Catherine Paul & Richard Nehring & David Banker & Agapi Somwaru, 2004. "Scale Economies and Efficiency in U.S. Agriculture: Are Traditional Farms History?," Journal of Productivity Analysis, Springer, vol. 22(3), pages 185-205, November.
    16. Hendricks, Nathan P. & Sinnathamby, Sumathy & Douglas-Mankin, Kyle & Smith, Aaron & Sumner, Daniel A. & Earnhart, Dietrich H., 2014. "The environmental effects of crop price increases: Nitrogen losses in the U.S. Corn Belt," Journal of Environmental Economics and Management, Elsevier, vol. 68(3), pages 507-526.
    17. Nigel Key & Michael J. Roberts, 2006. "Government Payments and Farm Business Survival," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 382-392.
    18. Ortiz-Bobea, Ariel & Tack, Jesse B., 2018. "Another genetic yield revolution is needed to offset climate change effects on U.S. maize," 2018 Annual Meeting, August 5-7, Washington, D.C. 274380, Agricultural and Applied Economics Association.
    19. David J. Pannell, 2008. "Public Benefits, Private Benefits, and Policy Mechanism Choice for Land-Use Change for Environmental Benefits," Land Economics, University of Wisconsin Press, vol. 84(2), pages 225-240.
    20. Hongbin Cai & Yuyu Chen & Hanming Fang & Li-An Zhou, 2015. "The Effect of Microinsurance on Economic Activities: Evidence from a Randomized Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 287-300, May.
    21. 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.
    22. Scott R. Jeffrey & Dawn E. Trautman & James R. Unterschultz, 2017. "Canadian Agricultural Business Risk Management Programs: Implications for Farm Wealth and Environmental Stewardship," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 65(4), pages 543-565, December.
    23. Howard D. Leathers & John C. Quiggin, 1991. "Interactions between Agricultural and Resource Policy: The Importance of Attitudes toward Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 757-764.
    24. Bruce A. Babcock & David A. Hennessy, 1996. "Input Demand under Yield and Revenue Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 416-427.
    25. DeLay, Nathan, 2019. "The Impact of Federal Crop Insurance on the Conservation Reserve Program – Erratum," Agricultural and Resource Economics Review, Cambridge University Press, vol. 48(3), pages 531-532, December.
    26. Peter Slade, 2020. "Business risk management programs under review," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(3), pages 263-270, September.
    27. Salvatore Di Falco & Felice Adinolfi & Martina Bozzola & Fabian Capitanio, 2014. "Crop Insurance as a Strategy for Adapting to Climate Change," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(2), pages 485-504, June.
    28. Calum G. Turvey, 2001. "Weather Derivatives for Specific Event Risks in Agriculture," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 23(2), pages 333-351.
    29. Vincent H. Smith & Barry K. Goodwin, 1996. "Crop Insurance, Moral Hazard, and Agricultural Chemical Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 428-438.
    30. Marshall Burke & Kyle Emerick, 2016. "Adaptation to Climate Change: Evidence from US Agriculture," American Economic Journal: Economic Policy, American Economic Association, vol. 8(3), pages 106-140, August.
    31. Calum G. Turvey, 2012. "Whole Farm Income Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 79(2), pages 515-540, June.
    32. Shenan Wu & Barry K. Goodwin & Keith Coble, 2020. "Moral hazard and subsidized crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 131-142, January.
    33. Kaylen, Michael S. & Loehman, Edna T. & Preckel, Paul V., 1989. "Farm-level analysis of agricultural insurance: A mathematical programming approach," Agricultural Systems, Elsevier, vol. 30(3), pages 235-244.
    34. C. Edwin Young & Monte L. Vandeveer & Randall D. Schnepf, 2001. "Production and Price Impacts of U.S. Crop Insurance Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1196-1203.
    35. 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.
    36. James Rude & Alan Ker, 2013. "Transfer Efficiency Analysis of Margin-Based Programs," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 61(4), pages 509-529, December.
    37. 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.
    38. Michael J. Roberts & Nigel Key, 2008. "Agricultural Payments and Land Concentration: A Semiparametric Spatial Regression Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 627-643.
    39. Azzam, Azzeddine & Walters, Cory & Kaus, Taylor, 2021. "Does subsidized crop insurance affect farm industry structure? Lessons from the U.S," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1167-1180.
    40. Burns, Christopher B. & Prager, Daniel L., 2018. "Does Crop Insurance Influence Commercial Crop Farm Decisions to Expand? An Analysis Using Panel Data from the Census of Agriculture," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(1), January.
    41. Key, Nigel, 2019. "Farm size and productivity growth in the United States Corn Belt," Food Policy, Elsevier, vol. 84(C), pages 186-195.
    42. Chemeris, Anna & Liu, Yong & Ker, Alan P., 2022. "Insurance subsidies, climate change, and innovation: Implications for crop yield resiliency," Food Policy, Elsevier, vol. 108(C).
    43. Seguin, Bob, 2012. "The Political Economy of Risk Management Programming in Canada: Strategic Commentary on BRM and RMP Policy and Programs," Miscellaneous Publications 289965, George Morris Center.
    44. Kenneth Poon & Alfons Weersink, 2014. "Growing Forward with Agricultural Policy: Strengths and Weaknesses of Canada's Agricultural Data Sets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(2), pages 191-218, June.
    45. Antoine Leblois & Philippe Quirion, 2013. "Agricultural insurances based on meteorological indices: realizations, methods and research challenges," Post-Print hal-00656778, HAL.
    46. JunJie Wu, 1999. "Crop Insurance, Acreage Decisions, and Nonpoint-Source Pollution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 305-320.
    47. Peter C. Boxall, 2018. "Evaluation of Agri†Environmental Programs: Can We Determine If We Grew Forward in an Environmentally Friendly Way?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(2), pages 171-186, June.
    48. Barry K. Goodwin & Vincent H. Smith, 2013. "What Harm Is Done By Subsidizing Crop Insurance?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 489-497.
    49. Alfons Weersink & Christin Eveland, 2006. "The Siting of Livestock Facilities and Environmental Regulations," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(1), pages 159-173, March.
    50. Tyler Freeman & James Nolan & Richard Schoney, 2009. "An Agent‐Based Simulation Model of Structural Change in Canadian Prairie Agriculture, 1960–2000," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(4), pages 537-554, December.
    51. DeLay, Nathan, 2019. "The Impact of Federal Crop Insurance on the Conservation Reserve Program," Agricultural and Resource Economics Review, Cambridge University Press, vol. 48(2), pages 297-327, August.
    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. Derek Brewin & Ryan Cardwell & Alan P. Ker, 2024. "Introduction to the special issue in honor of the late Dr. James Rude," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 72(3), pages 209-211, September.

    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. 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).
    2. 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.
    3. Chemeris, Anna & Liu, Yong & Ker, Alan P., 2022. "Insurance subsidies, climate change, and innovation: Implications for crop yield resiliency," Food Policy, Elsevier, vol. 108(C).
    4. Feng, Shuaizhang & Han, Yujie & Qiu, Huanguang, 2021. "Does crop insurance reduce pesticide usage? Evidence from China," China Economic Review, Elsevier, vol. 69(C).
    5. Möhring, Niklas & Dalhaus, Tobias & Enjolras, Geoffroy & Finger, Robert, 2020. "Crop insurance and pesticide use in European agriculture," Agricultural Systems, Elsevier, vol. 184(C).
    6. Jennifer Ifft & Margaret Jodlowski, 2024. "Farm heterogeneity and leveraging federal crop insurance for conservation practice adoption," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(2), pages 572-594, June.
    7. Biram, Hunter D. & Tack, Jesse & Nehring, Richard F., 2022. "Does Crop Insurance Participation Impact Quality-Adjusted Pesticide Usage?," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322136, Agricultural and Applied Economics Association.
    8. Prasenjit N. Ghosh & Ruiqing Miao & Emir Malikov, 2023. "Crop insurance premium subsidy and irrigation water withdrawals in the western United States," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(4), pages 968-992, October.
    9. 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.
    10. 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).
    11. Azzam, Azzeddine & Walters, Cory & Kaus, Taylor, 2021. "Does subsidized crop insurance affect farm industry structure? Lessons from the U.S," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1167-1180.
    12. repec:ags:aaea22:335971 is not listed on IDEAS
    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. Youngho Kim, 2024. "Payments for Ecosystem Services Programs and Climate Change Adaptation in Agriculture," Economics Series Working Papers 1054, University of Oxford, Department of Economics.
    15. Peter Slade, 2021. "The impact of price hedging on subsidized insurance: Evidence from Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(4), pages 447-464, December.
    16. Juan He & Xiaoyong Zheng & Roderick Rejesus & Jose Yorobe, 2020. "Input use under cost‐of‐production crop insurance: Theory and evidence," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 343-357, May.
    17. 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.
    18. Geoffroy Enjolras & Magali Aubert, 2020. "How does crop insurance influence pesticide use? Evidence from French farms," Review of Agricultural, Food and Environmental Studies, Springer, vol. 101(4), pages 461-485, December.
    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. Vigani, Mauro & Khafagy, Amr & Berry, Robert, 2024. "Public spending for agricultural risk management: Land use, regional welfare and intra-subsidy substitution," Food Policy, Elsevier, vol. 123(C).
    21. 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.

    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:bla:canjag:v:72:y:2024:i:3:p:309-324. 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: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/caefmea.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.