Effects of crop insurance on farm input use: Evidence from Kansas farm data
Crop insurance has been linked to changes in farm production decisions. In this study, we examine the effects of crop insurance participation and coverage on farm input use. Using a 1993–2016 panel of Kansas farms, evidence exists that insured farms apply more farm chemicals and seed per acre than u...
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| Veröffentlicht in: | Agricultural and resource economics review 2022-08, Vol.51 (2), p.361-379 |
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| creator | Regmi, Madhav Briggeman, Brian C. Featherstone, Allen M. |
| description | Crop insurance has been linked to changes in farm production decisions. In this study, we examine the effects of crop insurance participation and coverage on farm input use. Using a 1993–2016 panel of Kansas farms, evidence exists that insured farms apply more farm chemicals and seed per acre than uninsured farms. We use a fixed effects instrumental variable estimator to obtain the effects of change in crop insurance coverage on farm input use accounting farm-level heterogeneity. Empirical evidence suggests that changes in the levels of crop insurance coverage do not significantly affect farm chemical use. Thus, moral hazard effects from purchasing crop insurance are not large on a per acre basis but can lead to expenditures of $6,100 per farm. |
| doi_str_mv | 10.1017/age.2022.5 |
| format | Article |
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In this study, we examine the effects of crop insurance participation and coverage on farm input use. Using a 1993–2016 panel of Kansas farms, evidence exists that insured farms apply more farm chemicals and seed per acre than uninsured farms. We use a fixed effects instrumental variable estimator to obtain the effects of change in crop insurance coverage on farm input use accounting farm-level heterogeneity. Empirical evidence suggests that changes in the levels of crop insurance coverage do not significantly affect farm chemical use. Thus, moral hazard effects from purchasing crop insurance are not large on a per acre basis but can lead to expenditures of $6,100 per farm.</description><identifier>ISSN: 1068-2805</identifier><identifier>EISSN: 2372-2614</identifier><identifier>DOI: 10.1017/age.2022.5</identifier><language>eng</language><publisher>New York, USA: Cambridge University Press</publisher><subject>Agricultural economics ; Agricultural production ; Crop insurance ; Crops ; Economic theory ; Expected utility ; Expenditures ; Farms ; Fertilizers ; Herbicides ; Heterogeneity ; Insecticides ; Insurance ; Insurance coverage ; Integrals ; Moral hazard ; Pesticides ; Uninsured people</subject><ispartof>Agricultural and resource economics review, 2022-08, Vol.51 (2), p.361-379</ispartof><rights>The Author(s), 2022. Published by Cambridge University Press on behalf of the Northeastern Agricultural and Resource Economics Association</rights><rights>The Author(s), 2022. 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| subjects | Agricultural economics Agricultural production Crop insurance Crops Economic theory Expected utility Expenditures Farms Fertilizers Herbicides Heterogeneity Insecticides Insurance Insurance coverage Integrals Moral hazard Pesticides Uninsured people |
| title | Effects of crop insurance on farm input use: Evidence from Kansas farm data |
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