Financial insurance for extreme events can play an important role in hedging against the implications of climate change. This paper combines a comprehensive estimation strategy and a unique panel dataset to study the role of financial insurance in farmers' welfare under uncertainty. Data are drawn from a large Italian farm panel dataset. We find that (i) demand for insurance products is likely to increase in response to climatic conditions, and (ii) that the use of insurance reduces the extent of risk exposure. We also find that farms growing more crops are less likely to adopt the insurance scheme. This confirms what is found in the theoretical literature. Crop diversification can be a substitute for financial insurance in hedging against the impact of risk exposure on welfare.

We present a systematic review of the extensive body of research on farmer risk preference measurement across Europe. We capture the methodological developments over time and discuss remaining challenges and potential areas for further research. Given the constantly evolving policy environment in Europe, and increasing climate-change related risks and uncertainties, there is large value to be gained from enhancing our understanding of this fundamental aspect of farmers' decision making processes and consequent actions.

This research investigates the potential impact of warming on Italian agriculture. Using a detailed dataset of 16,000 farms across Italy, the study examines likely warming impacts in different regions and for different sectors of Italian agriculture. The study finds that farm net revenues are very sensitive to seasonal changes in temperature and precipitation. Livestock and crop farms have different responses to climate as do rainfed farms and irrigated crop farms. The overall results suggest mild consequences from marginal changes in climate but increasingly harmful effects from more severe climate scenarios.

The reduction of adverse health and environmental effects from pesticide use is currently a top priority on the agricultural policy agenda. Efficient pesticide policies must take into account farmers' application behavior, especially effects of pesticide use on economic risk. However, previous results regarding the direction of risk effects of pesticides are ambiguous. We show that the ambiguity in earlier studies could be due to the pesticide indicator selected. Indicators which fail to account for the heterogeneous properties of pesticides may be inapt for interpreting farmers' pesticide use decisions. Our analysis, based on a rich panel dataset of Swiss wheat producers with highly detailed information on pesticide use, considers different pesticide indicators and multiple sources of uncertainty. Our key finding is that indicator choice affects the magnitude and sign of estimated risk effects. Estimates of pesticide productivity and risk effects are significantly higher for fungicides, and even reversed for herbicides when we measure pesticide use in simple quantity units (kilogram per hectare)compared to the quality and intensity corrected Load Index. This means for example, that farmers will ceteris paribus use lower quantities of herbicides, but will increase the overall toxicity of the products applied with increasing risk aversion. We discuss implications of our findings for the design of pesticide policies and agricultural risk management instruments.