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Does Federal Crop Insurance Make Environmental Externalities from Agriculture Worse?

Jeremy Weber (), Nigel Key and Erik O'Donoghue

MPRA Paper from University Library of Munich, Germany

Abstract: Farmers dramatically increased their use of federal crop insurance in the 2000s. From 2000 to 2013, premium subsidies increased seven-fold and acres enrolled increased by 77 percent. Although designed for non-environmental goals, subsidized insurance may affect the use of land, fertilizer, and agrochemicals and therefore environmental externalities from agriculture. Using a novel panel data, we examine farmer responses to changes in coverage with an empirical approach that exploits program limits on coverage that were more binding for some farmers than for others. Estimates indicate that expanded coverage had little effect on the share of farmland harvested, crop specialization, productivity, or fertilizer and chemical use. More broadly, we construct and describe a new nation-wide, farm-level panel data set with nearly 32,500 farms observed at least twice over the 2000-2013 period, a resource that should enrich U.S. agro-environmental research.

Keywords: Crop insurance; agriculture; environmental externalities; fertilizer (search for similar items in EconPapers)
JEL-codes: Q12 Q15 Q18 (search for similar items in EconPapers)
Date: 2016-05-13
New Economics Papers: this item is included in nep-agr, nep-env and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18) Track citations by RSS feed

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Journal Article: Does Federal Crop Insurance Make Environmental Externalities from Agriculture Worse? (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:71293

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