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The Effect of Climate on Crop Insurance Premium Rates and Producer Subsidies

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  • Tack, Jesse B.

Abstract

Likely climate change impacts in the U.S. include damages to agricultural production resulting from increased exposure to extreme heat. However, considerable uncertainty remains regarding impacts on the performance of the Federal Crop Insurance Program. Here we utilized a large panel of corn yield data to predict the effect of a 1oC uniform increase in temperature on premium rates and subsidies for the Group Risk Plan. We found a statistically significant increase in rates, which is primarily driven by increased exposure to extreme heat. These increases induce large increases in subsidy payments, the incidence of which is spread disproportionately across regions.

Suggested Citation

  • Tack, Jesse B., 2013. "The Effect of Climate on Crop Insurance Premium Rates and Producer Subsidies," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149817, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:149817
    DOI: 10.22004/ag.econ.149817
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    Keywords

    Agricultural and Food Policy; Crop Production/Industries; Production Economics; Productivity Analysis; Risk and Uncertainty;
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