Do Cover Crops Reduce Production Risk?

Serkan Aglasan and Roderick M. Rejesus

No 324776, 2022 Annual Meeting, July 31-August 2, Anaheim, California from Agricultural and Applied Economics Association

Abstract: This study examines whether cover crop adoption reduces production risk. A crop insurance loss measure is used as the main measure of downside production risk. To achieve this objective, we utilize a county-level panel data set with information on cover crop adoption rate, crop insurance production losses, and weather variables. The data covers the main corn and soybean production regions in the Midwestern United States (US) for the period 2005 to 2018. We employ linear fixed effects econometric models and a number of robustness checks in the empirical analysis (i.e., including a fractional regression approach, recently developed instrumental variable procedures, and alternative empirical specifications). The estimation methods used take advantage of the panel nature of the data to address various specification and endogeneity issues. Our estimation results suggest that counties with higher cover crop adoption tend to have lower crop insurance losses (and thus have lower downside production risk).

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 33
Date: 2022
New Economics Papers: this item is included in nep-agr and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea22:324776

DOI: 10.22004/ag.econ.324776

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