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Impacts of Federal Crop Insurance on Land Use and Environmental Quality

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  • Claassen, Roger
  • Langpap, Christian
  • Wu, JunJie
Abstract
This paper integrates economic and physical models to assess how federal crop revenue insurance programs might affect land use, cropping systems, and environmental quality in the U.S. Corn Belt region. The empirical framework includes econometric models that predict land conversion, crop choices, and crop rotations at the parcel-level based on expectation and variance of crop revenues, land quality, climate conditions, and physical characteristics at each site. The predictions are then combined with site-specific environmental production functions to determine the effect of revenue insurance on nitrate runoff and leaching, soil water and wind erosion, and carbon sequestration. Results suggest that crop insurance will have small impacts on conversions of non-cropland to cropland, and somewhat more significant impacts on crop choice. These changes in crop mix have small impacts on agricultural pollution.

Suggested Citation

  • Claassen, Roger & Langpap, Christian & Wu, JunJie, 2015. "Impacts of Federal Crop Insurance on Land Use and Environmental Quality," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205340, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea15:205340
    DOI: 10.22004/ag.econ.205340
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    Cited by:

    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. Daniel P. Bigelow & Todd Kuethe, 2020. "A Tale of Two Borders: Use‐Value Assessment, Land Development, and Irrigation Investment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1404-1424, October.
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    5. Mauro Vigani & Jonas Kathage, 2019. "To Risk or Not to Risk? Risk Management and Farm Productivity," American Journal of Agricultural Economics, John Wiley & Sons, vol. 101(5), pages 1432-1454, October.
    6. Yuqiang Gao & Yongkang Shu & Hongjie Cao & Shuting Zhou & Shaobin Shi, 2021. "Fiscal Policy Dilemma in Resolving Agricultural Risks: Evidence from China’s Agricultural Insurance Subsidy Pilot," IJERPH, MDPI, vol. 18(14), pages 1-11, July.
    7. Bougherara, Douadia & Nauges, Céline, 2018. "How laboratory experiments could help disentangle the influences of production risk and risk preferences on input decisions," TSE Working Papers 18-903, Toulouse School of Economics (TSE).
    8. 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).
    9. Jianru Fu & Ruiyuan Shen & Chao Huang, 2023. "How does price insurance alleviate the fluctuation of agricultural product market? A dynamic analysis based on cobweb model," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(5), pages 202-211.
    10. Oladipo S. Obembe & Nathan P. Hendricks, 2022. "Marginal cost of carbon sequestration through forest afforestation of agricultural land in the southeastern United States," Agricultural Economics, International Association of Agricultural Economists, vol. 53(S1), pages 59-73, November.
    11. Nicholas J. Pates & Nathan P. Hendricks, 2021. "Fields from Afar: Evidence of Heterogeneity in United States Corn Rotational Response from Remote Sensing Data," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1759-1782, October.
    12. Rouhi Rad, Mani & Haacker, Erin M.K. & Sharda, Vaishali & Nozari, Soheil & Xiang, Zaichen & Araya, A. & Uddameri, Venkatesh & Suter, Jordan F. & Gowda, Prasanna, 2020. "MOD$$AT: A hydro-economic modeling framework for aquifer management in irrigated agricultural regions," Agricultural Water Management, Elsevier, vol. 238(C).
    13. 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.
    14. Reyes, Julian & Elias, Emile & Haacker, Erin & Kremen, Amy & Parker, Lauren & Rottler, Caitlin, 2020. "Assessing agricultural risk management using historic crop insurance loss data over the ogallala aquifer," Agricultural Water Management, Elsevier, vol. 232(C).
    15. repec:ags:aaea22:335971 is not listed on IDEAS
    16. Ferreira, Marcelo D P & Feres, Jose, 2018. "The Role of Climate Risk on Land Allocation in Brazilian Amazon," 2018 Annual Meeting, August 5-7, Washington, D.C. 274436, Agricultural and Applied Economics Association.
    17. Manning, Dale & Rad, Mani Rouhi & Ogle, Stephen, 2022. "Inferring the Supply of GHG Abatement from Agricultural Lands," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322539, Agricultural and Applied Economics Association.
    18. Zhifeng Zhang & Haodong Xu & Shuangshuang Shan & Qingzhi Liu & Yuqi Lu, 2022. "Whether the Agricultural Insurance Policy Achieves Green Income Growth—Evidence from the Implementation of China’s Total Cost Insurance Pilot Program," IJERPH, MDPI, vol. 19(2), pages 1-20, January.
    19. Dongli Wu & Shan He & Lingui Qin & Jingyue Feng & Yu Gao, 2024. "Role of Policy-Supported Hog Insurance in Promoting Green Total Factor Productivity: The Case of China during 2005–2021," Agriculture, MDPI, vol. 14(7), pages 1-24, June.
    20. Shebanina, Olena & Burkovska, Anna & Petrenko, Vadym & Burkovska, Alla, 2023. "Economic planning at agricultural enterprises: Ukrainian experience of increasing the availability of data in the context of food security," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(4), December.
    21. 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.
    22. Winters-Michaud, Clayton P. & Haro, Alfredo & Callahan, Scott & Bigelow, Daniel P., 2024. "Major Uses of Land in the United States, 2017," Economic Information Bulletin 345316, United States Department of Agriculture, Economic Research Service.
    23. Liu, Y. & Ker, A., 2018. "Is There Too Much History in Historical Yield Data," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277293, International Association of Agricultural Economists.
    24. Patil, Vikram & Veettil, Prakashan Chellattan & Yashodha, Yashodha, 2021. "Understanding Farmers’ Low Uptake of Crop Insurance in India: A Discrete Choice Experiment Approach," 2021 Conference, August 17-31, 2021, Virtual 315232, International Association of Agricultural Economists.

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    More about this item

    Keywords

    Agricultural and Food Policy; Crop Production/Industries; Environmental Economics and Policy; Land Economics/Use; Risk and Uncertainty;
    All these keywords.

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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