The Development of a Weather-based Crop Disaster Program

AAEA members release research in AJAE

Floods, tornados, hurricanes and many other natural disasters can be dentramental to American farmland. Is there a way for producer to save money when partaking in a crop insurance program even if the weather is not cooperating?

Three researchers say that “a weather based crop insurance program would save between $3-4 billion per year, relative to the current crop insurance program.”

In a new article, “The Development of a Weather-based Crop Disaster Program" featured in the American Journal of Agricultural Economics, authors, Eric Belasco and Vincent Smith from Montana State University, as well as Joseph Cooper from the USDA – Economic Research Service look into a hypothetical disaster program or product for field crops that would be weather-based.

Belasco says, “In an era when agricultural programs are constantly being asked to reduce expenditures, the proposed crop disaster program potentially adds a path forward that would reduce expenditures related to the cost of administering the crop insurance program, while maintaining the risk reduction benefits to farmers associated with systemic risk.  Also, with the availability of weather and satellite data, along with advancing methods to better understand the relationship between weather and yields, this research opens the door for future research to refine these relationships.

If you are interested in setting up an interview with Eric Belasco, please contact in the AAEA Business Office.

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 two journals, 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.

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