Efficiency Impacts of Utilizing Soil Data in the Pricing of the Federal Crop Insurance Program

Joshua D. Woodard and Leslie J. Verteramo-Chiu

American Journal of Agricultural Economics, 2017, vol. 99, issue 3, 757-772

Abstract: Since the Agricultural Act of 2014, the federal crop insurance program (FCIP) has been the cornerstone agricultural policy in the United States, and is the largest such program globally, with about $100 billion in coverage annually. Given its scale and scope, the FCIP has the potential to have pervasive impacts on incentives and policy functioning if not designed and priced properly. Surprisingly, soil data are not considered by the government when establishing insurance guarantees or rates. Using soil data that could easily and feasibly be scaled nationally, we find that the pricing differentials caused by the government's failure to handle soil information leads to large errors in rating.

Keywords: Federal crop insurance; soil; risk management; insurance rating (search for similar items in EconPapers)
JEL-codes: G22 Q14 Q18 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://hdl.handle.net/10.1093/ajae/aaw099 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:99:y:2017:i:3:p:757-772.

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().