The Effects of Crop Insurance Subsidies and Sodsaver on Land-Use Change

Date
2016-05-01
Authors
Miao, Ruiqing
Hennessy, David
Feng, Hongli
Journal Title
Journal ISSN
Volume Title
Publisher
Altmetrics
Authors
Research Projects
Organizational Units
Economics
Organizational Unit
Journal Issue
Series
Abstract

It is well known that insurance market information asymmetry can cause socially excessive cropping of yield-risky land. We show that crop insurance subsidies can cause the same problem absent information failures. Using field-level yield data, we find an inversed U-shaped relationship between crop prices and crop insurance subsidies’ land-use impacts. For seventeen counties in the U.S. Prairie Pothole Region, simulations show that 0.05% to 3.3% (about 2,600 to 157,900 acres) of land under crop insurance would not have been converted from grassland had premium subsidies not existed. Land-use impacts of Sodsaver in the 2014 Farm Act are also quantified.

Description

This article is published as Miao, Ruiqing, David A. Hennessy, and Hongli Feng. "The effects of crop insurance subsidies and Sodsaver on land-use change." Journal of Agricultural and Resource Economics 41 (2016): 247-265. doi:10.22004/ag.econ.235189. Posted with permission.

Keywords
copula, crop insurance, grassland, land use, Sodsaver, subsidy chasing
Citation
DOI
Collections