Farm Heterogeneity and Leveraging Federal Crop Insurance for Conservation Practice Adoption
AAEA members release new research in AEPP
Many studies have considered the relationship between crop insurance and individual conservation practices. A new study considers the relationship between crop insurance and a broad set of conservation practices, as well as developing a unique approach to use survey data to measure the environmental impact of nitrogen that also accounts for a producers’ yield goals. The research is one step forward in conducting analysis that looks at the broader set of production and conservation practices on farms, as well as actual environmental impacts.
In the new article “Farm Heterogeneity and Leveraging Federal Crop Insurance for Conservation Practice Adoption” featured in the Applied Economic Perspectives & Policy, Jennifer Ifft from Kansas State University and Margaret Jodlowski from The Ohio State University, dig into if farm that use crop insurance have different conservation practices and more or less nitrogen use, relative to other farms.
The authors say, “Many current and proposed policies aim to use the Federal crop insurance program to leverage adoption of conservation practices. The broad goal of the FCIP to promote the economic stability of the agricultural economy may be complementary with this broad push towards conservation incentives and endorsements, but other policymakers and farm interest groups have raised concerns about maintaining the integrity of the FCIP as the primary tool used to manage revenue risk by many operations. A comprehensive understanding of existing practices and resulting environmental impacts of producers that currently use crop insurance programs can inform the potential for leveraging these programs to incentivize practice adoption or behavioral change in the future. Generally, leveraging existing programs rests on (often implicit) assumptions of additionality: that farms that more intensively use crop insurance are likely to respond to new incentives and that a sufficient share of farms being targeted have not already adopted the conservation or production practice that is being incentivized. For some practices, our analysis indicates that policymakers may want to consider the additionality of incentives attached to the FCIP. However, our analysis also suggests that farms that more intensively use crop insurance may be more responsive to financial incentives, which could accelerate adoption.”
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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org
Contact: Allison Ware
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Email: aware@aaea.org.