Risk reduction impacts of crop insurance in the United States

Francis Tsiboe, Dylan Turner, Katherine Baldwin, Brian Williams, Matthew Miller and Erik Dohlman

Applied Economic Perspectives and Policy, 2025, vol. 47, issue 5, 1832-1847

Abstract: The Federal Crop Insurance Program (FCIP) offers insurance policies that reduce the risk of declining farm revenues by increasing mean revenue, decreasing revenue variability, or some combination of both. Using historic data from the FCIP, this paper estimates the effect that different insurance policies have on mean revenue and revenue variability and to what degree indemnity payments are converted into reduced revenue variability. The results suggest that on average, a 1% increase in revenue results in a 2.25% reduction in inter‐crop‐year revenue variability. Most of this effect is found to be attributed to individual revenue and yield protection plans, which are the most participated‐in insurance plans and generally produce simultaneous increases in mean revenue and decreases in revenue variability.

Date: 2025
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https://doi.org/10.1002/aepp.13513

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Persistent link: https://EconPapers.repec.org/RePEc:wly:apecpp:v:47:y:2025:i:5:p:1832-1847

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