IDEAS home Printed from https://ideas.repec.org/p/bfr/banfra/956.html
   My bibliography  Save this paper

Don't bet the Farm on Crop Insurance Subsidies: A Marginal Treatment Effect Analysis of French Farms

Author

Listed:
  • Céline Grislain-Letrémy, Bertrand Villeneuve
  • Bertrand Villeneuve
  • Marc Yeterian

Abstract

Crop insurance is one of the most important protections against climate-related risks for farmers. Despite being heavily subsidized, insurance take-up in France remains surprisingly low. The goal of this paper is twofold; first, we explain this paradox by analyzing the heterogeneous effects of taking up crop insurance, and second, we provide concrete welfare-enhancing policy recommendations to increase insurance take-up. Using a micro-level panel of 17,000 French farmers over 20 years, we first use a moment-based regression to identify the local average treatment effects (LATE) of insurance on expected revenues and variance. Then we investigate the factors causing the heterogeneity in these effects, boThéobservable through interaction terms and unobservable through a marginal treatment effect (MTE) design. We conclude that insurance subsidies have very little impact on crop insurance demand, especially for those who would benefit the most. Finally, we suggest cost-efficient ways to increase insurance take-up based on administrative simplification, information and imitation.

Suggested Citation

  • Céline Grislain-Letrémy, Bertrand Villeneuve & Bertrand Villeneuve & Marc Yeterian, 2024. "Don't bet the Farm on Crop Insurance Subsidies: A Marginal Treatment Effect Analysis of French Farms," Working papers 956, Banque de France.
    • Handle: RePEc:bfr:banfra:956
    as

    Download full text from publisher

    File URL: https://www.banque-france.fr/system/files/2024-07/WP956_0.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Insurance; Agriculture; Marginal Treatment Effects; Instrumental Variable;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

    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:bfr:banfra:956. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Michael brassart (email available below). General contact details of provider: https://edirc.repec.org/data/bdfgvfr.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.