Crop insurance participation and cover crop use: Evidence from Indiana county‐level data

Lawson Connor, Roderick M. Rejesus and Mahmut Yasar

Applied Economic Perspectives and Policy, 2022, vol. 44, issue 4, 2181-2208

Abstract: This study examines whether crop insurance participation reduces incentives to use cover crops in corn and soybean production. To achieve this objective, we utilize 2006–2015 county‐level longitudinal data with information on cover crop adoption and crop insurance participation for the State of Indiana. Cover crop adoption information is collected from a remote sensing (satellite‐based) data set of soil health practices. Linear fixed effect (FE) models and instrumental variable FE models are used in the empirical analysis to take advantage of the panel nature of the data and address potential endogeneity issues. Our results suggest that while crop insurance coverage may play a role in “disincentivizing” cover crop use, it is likely not a major driver in the cover crop adoption decision (i.e., the magnitude of the effect is small). Therefore, further research and policy attention toward other potential mechanisms that can likely have a larger impact on cover crop uptake may be a better approach (e.g., enhanced outreach programs and/or additional targeted conservation payments).

Date: 2022
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https://doi.org/10.1002/aepp.13206

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Persistent link: https://EconPapers.repec.org/RePEc:wly:apecpp:v:44:y:2022:i:4:p:2181-2208

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