Crop insurance participation and cover crop use: Evidence from Indiana county‐level data

Connor, Lawson; Rejesus, Roderick M.; Yaşar, Mahmut

doi:10.1002/aepp.13206

Cited by 19 publications

(23 citation statements)

References 43 publications

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“…According to DeLay (2019), the instrument captures how much a county sees its effective subsidy rates increase and hence can be used to estimate the variation in insured acreage due only to changes in government policy and not to contemporaneous land-use decisions. Connor et al (2021) adopted a version of this instrument that used a policy exposure measure constructed as the proportion of insured acres for coverage levels.…”

Section: Available Instruments For Crop Insurancementioning

confidence: 99%

“…Regardless if crop insurance demand is specified as a dependent or independent variable, researchers may consider using instrumental variables to generate the requisite exogenous variation for credible econometric identification (Roberts et al 2006; Walters et al 2012; Falco et al 2014; Deryugina and Konar 2017; Connor et al 2021). However, finding a suitable instrument is often challenging.…”

Section: Introductionmentioning

confidence: 99%

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Econometric identification of crop insurance participation

Tsiboe

Turner

2023

Agric. Resour. Econom. Rev.

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This paper shows how econometric identification can be improved in studies making use of crop insurance participation as either an independent or dependent variable. The paper provides the reader with a succinct overview of how crop insurance contracts are priced and how to use publicly available data to derive a novel composite crop insurance design parameter that emulates existing crop insurance rating parameters using a procedure that is based on current actuarial practices. The derived design parameter performs well at predicting historic crop insurance loss-cost ratios and satisfies the requirements for an instrumental variable for a variety of empirical applications related to crop insurance. Representative empirical examples are presented where it is shown that the proposed instrument has favorable two-staged least squares diagnostic tests and is effective at eliminating endogeneity bias.

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Section: Available Instruments For Crop Insurancementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Econometric identification of crop insurance participation

Tsiboe

Turner

2023

Agric. Resour. Econom. Rev.

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“…CC acres have 70% chance of persistence after a 3‐year contract period in the Mississippi Delta region. This may be attributed to several beneficial aspects of CCs, such as water quality improvement, soil erosion reduction, yield improvement, resilience against weather extremities, tax breaks, discounts in crop insurance rates, and reduction in the need for herbicides and pesticides (Aglasan et al., 2023; Blanco‐Canqui, 2018; Connor et al., 2021; Kaye & Quemada, 2017; Myers & Wilson, 2023; Snapp et al., 2005). The results are consistent with the general trend of CCs acreage.…”

Section: Resultsmentioning

confidence: 99%

Persistence and disadoption of sustainable agricultural practices in the Mississippi Delta region

Pathak,

Wang,

Tran

et al. 2024

Agronomy Journal

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The working lands programs in the United States are specifically tailored to support farmers in initiating or enhancing conservation practices. The expectation is that farmers receiving financial assistance will continue implementing these practices even after their initial contracts end, thereby increasing programs’ cost‐effectiveness and promoting natural resources conservation. However, little is known about the likelihood of persistence and disadoption of conservation practices once the initial cost‐share contracts expire. Using the first‐order Markov chain framework on state‐level conservation practices acreage data from the Mississippi Delta region (2005‐2022), this study provides quantitative estimates of changing (dis)adoption patterns of four conservation practices: cover crops, conservation tillage, nutrient and irrigation management, and conservation crop rotation. The findings reveal a higher probability of persistence of nutrient and irrigation management practices. In contrast, acres devoted to cover crops and conservation tillage tend to transition into other alternative practices, indicating a greater likelihood of disadoption. Importantly, the likelihood of acres that initially adopt conservation practices with funding shifting to a condition of no conservation activity is minimal. The transition probability estimates facilitate the prediction of future adoption rates of conservation practices and aid funding agencies in prioritizing their conservation efforts.This article is protected by copyright. All rights reserved

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“…The only studies we found that use satellite-based cover crop data are Seifert et al (2018), Chen et al (2021) Connor et al (2022), andPark et al (2022).…”

Section: Prevented Planting In Crop Insurancementioning

confidence: 99%

“…In general, one cannot say that one data source is superior to another, and each (OpTIS or AgCensus) is a reasonable source of cover crop adoption data (i.e., the estimated correlation between the OpTIS and the AgCensus cover crop areas is 0.67 based on the study by Hagen et al, 2020). It should also be noted that the OpTIS data now has a track record of being used in agricultural economics research published in peer‐reviewed journals (Chen et al, 2021; Connor et al, 2022).…”

Section: Data Descriptionmentioning

confidence: 99%

Understanding the effect of cover crop use on prevented planting losses

Won

Rejesus

Goodwin

et al. 2023

American J Agri Economics

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Cover cropping has the potential to improve resilience of agriculture to climate‐change‐induced extreme weather events. However, rigorous quantitative evidence on the resilience effect of cover crops is still lacking. Using a novel data set that combines satellite‐based cover crop information and county‐level crop insurance data, we examine the impact of planting cover crops on prevented‐planting‐related losses that are typically caused by heavy rainfall events. The US federal crop insurance program offers “prevented planting” coverage, which pays indemnities if insured growers are unable to plant their crop due to adverse weather. Linear fixed effects models, instrument‐based estimation methods, long‐difference models, and a number of other robustness checks are utilized in the empirical analysis to achieve the study objective. Our findings suggest that counties with higher cover crop adoption rates tend to have lower levels of crop insurance losses due to prevented planting. The resulting reduction in prevented planting risk also becomes larger with longer term, multiyear cover crop use. These results support the notion that cover crops improve soil conditions such that the likelihood and magnitude of prevented planting losses decrease. We posit that the ability of cover crops to handle excess moisture (i.e., through better water absorption and improved water infiltration in the soil) is the main factor in its ability to reduce prevented planting losses in the US Midwest.

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Crop insurance participation and cover crop use: Evidence from Indiana county‐level data

Cited by 19 publications

References 43 publications

Econometric identification of crop insurance participation

Econometric identification of crop insurance participation

Persistence and disadoption of sustainable agricultural practices in the Mississippi Delta region

Understanding the effect of cover crop use on prevented planting losses

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