IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v227y2025ics0921800924003124.html
   My bibliography  Save this article

Natural insurance as a green alternative for farmers? Empirical evidence for semi-natural habitats and methodological bias

Author

Listed:
  • Faure, Jérôme
  • Mouysset, Lauriane

Abstract

Natural insurance based on the provision of ecosystem services is a promising tool for the future of agriculture. However, empirical evidence of the role it can play is lacking, and its integration into standard insurance strategies – for example, the use of pesticides or market-based insurance – has been understudied. To begin to fill this gap, this study developed an original conceptual framework to estimate the insurance value provided by semi-natural habitats in a crop production context. The framework was then applied to a case study in western France, focusing on the value of natural pest control provided by grassland areas in the context of oilseed rape production. We evaluated the insurance role of grasslands for pest control and estimated this at a value of €50 per hectare. However, this estimation varied greatly according to the farmer's risk-mitigation strategies considered. We found that omitting agricultural inputs (e.g. risk-mitigating inputs such as pesticides) overestimated the insurance value of grassland areas due to the substitution effect between different types of insurance tools. Despite this variation, the findings show that it is nonetheless always optimal for farmers to maintain grassland areas to manage risk. This study provides empirical evidence of the insurance role of semi-natural habitats in an agricultural production context and offers new arguments for the ecological intensification of agriculture.

Suggested Citation

  • Faure, Jérôme & Mouysset, Lauriane, 2025. "Natural insurance as a green alternative for farmers? Empirical evidence for semi-natural habitats and methodological bias," Ecological Economics, Elsevier, vol. 227(C).
    • Handle: RePEc:eee:ecolec:v:227:y:2025:i:c:s0921800924003124
    DOI: 10.1016/j.ecolecon.2024.108415
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800924003124
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2024.108415?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John M. Antle & Susan M. Capalbo, 2001. "Econometric-Process Models for Integrated Assessment of Agricultural Production Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 389-401.
    2. Ivana Logar & Jeroen Bergh, 2013. "Methods to Assess Costs of Drought Damages and Policies for Drought Mitigation and Adaptation: Review and Recommendations," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(6), pages 1707-1720, April.
    3. Paavola, Jouni & Primmer, Eeva, 2019. "Governing the Provision of Insurance Value From Ecosystems," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.
    4. 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.
    5. Muyesaier Tudi & Huada Daniel Ruan & Li Wang & Jia Lyu & Ross Sadler & Des Connell & Cordia Chu & Dung Tri Phung, 2021. "Agriculture Development, Pesticide Application and Its Impact on the Environment," IJERPH, MDPI, vol. 18(3), pages 1-23, January.
    6. Salvatore Di Falco & Jean-Paul Chavas, 2006. "Crop genetic diversity, farm productivity and the management of environmental risk in rainfed agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(3), pages 289-314, September.
    7. Dallimer, Martin & Martin-Ortega, Julia & Rendon, Olivia & Afionis, Stavros & Bark, Rosalind & Gordon, Iain J. & Paavola, Jouni, 2020. "Taking stock of the empirical evidence on the insurance value of ecosystems," Ecological Economics, Elsevier, vol. 167(C).
    8. Peter Zweifel & Roland Eisen, 2012. "Insurance Economics," Springer Texts in Business and Economics, Springer, edition 127, number 978-3-642-20548-4, July.
    9. Möhring, Niklas & Dalhaus, Tobias & Enjolras, Geoffroy & Finger, Robert, 2020. "Crop insurance and pesticide use in European agriculture," Agricultural Systems, Elsevier, vol. 184(C).
    10. David J. Pannell, 1991. "Pests and pesticides, risk and risk aversion," Agricultural Economics, International Association of Agricultural Economists, vol. 5(4), pages 361-383, August.
    11. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-648, July-Aug..
    12. Zeeshan Mustafa & Giuliano Vitali & Ray Huffaker & Maurizio Canavari, 2024. "A systematic review on price volatility in agriculture," Journal of Economic Surveys, Wiley Blackwell, vol. 38(1), pages 268-294, February.
    13. Faure, Jérôme & Mouysset, Lauriane & Gaba, Sabrina, 2023. "Combining incentives with collective action to provide pollination and a bundle of ecosystem services in farmland," Ecosystem Services, Elsevier, vol. 63(C).
    14. Finger, Robert & Sok, Jaap & Ahovi, Emmanuel & Akter, Sharmin & Bremmer, Johan & Dachbrodt-Saaydeh, Silke & de Lauwere, Carolien & Kreft, Cordelia & Kudsk, Per & Lambarraa-Lehnhardt, Fatima & McCallum, 2024. "Towards sustainable crop protection in agriculture: A framework for research and policy," Agricultural Systems, Elsevier, vol. 219(C).
    15. Schaub, Sergei & Buchmann, Nina & Lüscher, Andreas & Finger, Robert, 2020. "Economic benefits from plant species diversity in intensively managed grasslands," Ecological Economics, Elsevier, vol. 168(C).
    16. B. A. Woodcock & M. P. D. Garratt & G. D. Powney & R. F. Shaw & J. L. Osborne & J. Soroka & S. A. M. Lindström & D. Stanley & P. Ouvrard & M. E. Edwards & F. Jauker & M. E. McCracken & Y. Zou & S. G. , 2019. "Meta-analysis reveals that pollinator functional diversity and abundance enhance crop pollination and yield," Nature Communications, Nature, vol. 10(1), pages 1-10, December.
    17. Niklas Möhring & Martina Bozzola & Stefan Hirsch & Robert Finger, 2020. "Are pesticides risk decreasing? The relevance of pesticide indicator choice in empirical analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 429-444, May.
    18. 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.
    19. Quaas, Martin F. & Baumgärtner, Stefan, 2008. "Natural vs. financial insurance in the management of public-good ecosystems," Ecological Economics, Elsevier, vol. 65(2), pages 397-406, April.
    20. Peter Zweifel & Roland Eisen, 2012. "Introduction: Insurance and Its Economic Role," Springer Texts in Business and Economics, in: Insurance Economics, edition 127, chapter 1, pages 1-23, Springer.
    21. Atanu Saha & C. Richard Shumway & Arthur Havenner, 1997. "The Economics and Econometrics of Damage Control," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 773-785.
    22. Markowitz, Harry M, 1991. "Foundations of Portfolio Theory," Journal of Finance, American Finance Association, vol. 46(2), pages 469-477, June.
    23. Jens Rommel & Julian Sagebiel & Marieke Cornelia Baaken & Jesús Barreiro‐Hurlé & Douadia Bougherara & Luigi Cembalo & Marija Cerjak & Tajana Čop & Mikołaj Czajkowski & María Espinosa‐Goded & Julia Höh, 2023. "Farmers' risk preferences in 11 European farming systems: A multi‐country replication of Bocquého et al. ()," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(3), pages 1374-1399, September.
    24. Peled, Yoav & Zemah-Shamir, Shiri & Israel, Alvaro & Shechter, Mordechai & Ofir, Eyal & Gal, Gideon, 2020. "Incorporating insurance value into ecosystem services assessments: Mitigation of ecosystem users’ welfare uncertainty through biological control," Ecosystem Services, Elsevier, vol. 46(C).
    25. Stefan Baumgärtner & Martin F. Quaas, 2010. "Managing increasing environmental risks through agrobiodiversity and agrienvironmental policies," Agricultural Economics, International Association of Agricultural Economists, vol. 41(5), pages 483-496, September.
    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. Jørgensen, Sisse Liv & Termansen, Mette & Pascual, Unai, 2020. "Natural insurance as condition for market insurance: Climate change adaptation in agriculture," Ecological Economics, Elsevier, vol. 169(C).
    2. 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.
    3. Cécile Aubert & Yann Raineau & Marc Raynal & Nicolas Pasquier, 2024. "Multiple agricultural risks and insurance—issues, perspectives, and illustration for wine-growing," Review of Agricultural, Food and Environmental Studies, Springer, vol. 105(4), pages 371-391, December.
    4. Möhring, Niklas & Dalhaus, Tobias & Enjolras, Geoffroy & Finger, Robert, 2020. "Crop insurance and pesticide use in European agriculture," Agricultural Systems, Elsevier, vol. 184(C).
    5. 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.
    6. Bontemps, Christophe & Bougherara, Douadia & Nauges, Céline, 2020. "Do Risk Preferences Really Matter? The Case of Pesticide Use in Agriculture," TSE Working Papers 20-1095, Toulouse School of Economics (TSE).
    7. Skevas, Theodoros & Stefanou, Spiro E. & Oude Lansink, Alfons, 2014. "Pesticide use, environmental spillovers and efficiency: A DEA risk-adjusted efficiency approach applied to Dutch arable farming," European Journal of Operational Research, Elsevier, vol. 237(2), pages 658-664.
    8. Dallimer, Martin & Martin-Ortega, Julia & Rendon, Olivia & Afionis, Stavros & Bark, Rosalind & Gordon, Iain J. & Paavola, Jouni, 2020. "Taking stock of the empirical evidence on the insurance value of ecosystems," Ecological Economics, Elsevier, vol. 167(C).
    9. Carpentier, A. & Reboud, X., 2018. "Why farmers consider pesticides the ultimate in crop protection: economic and behavioral insights," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277528, International Association of Agricultural Economists.
    10. 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.
    11. Geoffroy Enjolras & Magali Aubert, 2018. "Does crop insurance lead to better environmental practices? Evidence from French farms," Post-Print hal-02048349, HAL.
    12. Feng, Shuaizhang & Han, Yujie & Qiu, Huanguang, 2021. "Does crop insurance reduce pesticide usage? Evidence from China," China Economic Review, Elsevier, vol. 69(C).
    13. Stefan Baumgärtner & Martin F. Quaas, 2010. "Managing increasing environmental risks through agrobiodiversity and agrienvironmental policies," Agricultural Economics, International Association of Agricultural Economists, vol. 41(5), pages 483-496, September.
    14. Niklas Möhring & Martina Bozzola & Stefan Hirsch & Robert Finger, 2020. "Are pesticides risk decreasing? The relevance of pesticide indicator choice in empirical analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 429-444, May.
    15. Peilu Zhang & Marco A. Palma, 2021. "Compulsory Versus Voluntary Insurance: An Online Experiment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(1), pages 106-125, January.
    16. 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).
    17. Carpentier, Alain, 2017. "Risk Aversion And Pesticide Use: Further Insights From Prospect Theory," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261265, European Association of Agricultural Economists.
    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. Hahn, Thomas & Sioen, Giles B. & Gasparatos, Alexandros & Elmqvist, Thomas & Brondizio, Eduardo & Gómez-Baggethun, Erik & Folke, Carl & Setiawati, Martiwi Diah & Atmaja, Tri & Arini, Enggar Yustisi & , 2023. "Insurance value of biodiversity in the Anthropocene is the full resilience value," Ecological Economics, Elsevier, vol. 208(C).
    20. Nolan, Elizabeth & Santos, Paulo, 2012. "Insurance premiums and GM traits," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125942, International Association of Agricultural Economists.

    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:eee:ecolec:v:227:y:2025:i:c:s0921800924003124. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    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.