Do Direct Payments Influence Farmers' Hail Insurance Decisions?

Robert Finger and Niklaus Lehmann ()

No 114355, 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland from European Association of Agricultural Economists

Abstract: We analyze determinants of hail insurance use of Swiss farmers, covering the period 1990-2009 using FADN panel data. Mixed effect logistic regression models are estimated to identify the most important farm and farmer characteristics that determine insurance use. In addition, information on local hail risk is taken into account in these models. It shows that larger farms, with specialization on crop production, and with larger local hail risks are more likely to adopt the hail insurance. Moreover, insurance users are usually older and better educated. Since the early 1990s, Swiss agricultural policy has reduced price support and introduced general and ecological direct payments. This has led to a much higher importance of direct payments for farmers’ incomes. We find that this development has contributed to decreasing hail adoption rates in Switzerland in the considered period, due to the insurance and wealth effects of direct payments. Our results indicate that the larger the share of direct payments for total farm revenue, the more subsidies would be required to induce hail insurance adoption. Thus, agricultural policy should explicitly consider this interdependency.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 13
Date: 2011
New Economics Papers: this item is included in nep-agr and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://ageconsearch.umn.edu/record/114355/files/Finger_Robert_404.pdf (application/pdf)

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:ags:eaae11:114355

DOI: 10.22004/ag.econ.114355

Access Statistics for this paper

More papers in 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland from European Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().