Extent, Location, and Characteristics of Land Cropped Due to Insurance Subsidies

Roger Claassen, Ruben N. Lubowski and Michael Roberts

No 19546, 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: We examine changes in land use caused by the large increase in crop insurance premium subsidies under the 1994 Federal Crop Insurance and Reform Act (FCIRA). We use a conditional logit model to estimate changes in six major land uses from 1992 and 1997 as a function of the change in expected return to crop insurance. Our data on individual land parcels across the entire coterminous United States enable identification of the extent, location, and physical characteristics of the land brought into and retained in production as a result of the crop insurance policies. Results indicate the additional crop insurance premium subsidies increased cultivated cropland area on the order of 1.9 million acres (0.6%), consistent with the lower range of previous estimates of crop insurance acreage effects. The estimated lands in production due to the subsidy increases are of lower quality than cropland overall in term of both Land Capability Classification and proneness to flooding, as well as more environmentally sensitive in terms of erodibility and proportion in wetlands.

Keywords: Land; Economics/Use (search for similar items in EconPapers)
Pages: 27
Date: 2005
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea05:19546

DOI: 10.22004/ag.econ.19546

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