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Crop Insurance and Pesticides in French agriculture: an empirical analysis of multiple risks management

Author

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  • Raja Chakir

    (ECO-PUB - Economie Publique - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

  • Julien Hardelin

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique)

Abstract

This paper investigates the determinants of rapeseed hail insurance and chemical input decisions using individual panel data set of French farms covering the period from 1993 to 2004. Economic theory suggests that insurance and prevention decisions are not independent due to risk reduction and/or moral hazard eff ects. We propose a theoretical framework that integrates two statistically independent sources of risk faced by farmers of our sample hail risk and pest risk. Statistical tests confi rm that chemical and insurance demands are endogenous to each other and simultaneously determined. An econometric model involving two simultaneous equations with mixed censored/continuous dependent variables is thus estimated for rapeseed. Estimation results show that rapeseed insurance demand has a positive and signi cant eff ect on pesticide use and vice versa. Insurance demand is also positively in uenced by the yield's coeffi cient of variation and the loss ratio, and negatively infl uenced by proxies for wealth (including CAP subsidies) and activity diversi cation.

Suggested Citation

  • Raja Chakir & Julien Hardelin, 2010. "Crop Insurance and Pesticides in French agriculture: an empirical analysis of multiple risks management," Working Papers hal-00753733, HAL.
    • Handle: RePEc:hal:wpaper:hal-00753733
    Note: View the original document on HAL open archive server: https://hal.science/hal-00753733
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    References listed on IDEAS

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    Cited by:

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    2. Robert Finger & Niklaus Lehmann, 2012. "The influence of direct payments on farmers’ hail insurance decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 343-354, May.
    3. 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.
    4. 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).
    5. Ayenew, Habtamu Yesigat & Sauer, Johannes & Abate-Kassa, Getachew, 2016. "Cost of Risk Exposure, Farm Disinvestment and Adaptation to Climate Uncertainties: The Case of Arable Farms in the EU," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235595, Agricultural and Applied Economics Association.

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