The Impact of Crop Insurance on Fertilizer Use: Evidence from Grain Producers in China

Chongshang Zhang, Kaiyu Lyu and Chi Zhang ()
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Chongshang Zhang: Institute of Agricultural Economics and Development, Chinese Academy of Agricultural Sciences, Beijing 100081, China
Kaiyu Lyu: Institute of Agricultural Economics and Development, Chinese Academy of Agricultural Sciences, Beijing 100081, China
Chi Zhang: School of Public Administration, Zhejiang University of Finance and Economics, Hangzhou 310012, China

Agriculture, 2024, vol. 14, issue 3, 1-13

Abstract: This study aims to examine the influence of crop insurance on the utilization of chemical fertilizers using plot-level data. The dataset utilized in this analysis consists of information obtained from 1039 participants residing in four major grain-producing provinces (Heilongjiang, Zhejiang, Henan, and Sichuan) in China. To address the potential issue of endogeneity, instrumental variables were employed to establish a causal relationship within the empirical model. The findings of this study indicate that crop insurance does not exert a statistically significant impact on overall fertilizer input in China. Nonetheless, the effect varies across different categories of farmers. Specifically, large-scale farmers experience a moderate reduction in fertilizer input as a result of crop insurance, while small-scale farmers do not demonstrate a significant effect. It is essential to strike a balance between risk protection and the potential influence of moral hazard in order to enhance future crop insurance policies.

Keywords: crop insurance; fertilizer; farm size; grain producers (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2024
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