Historical warming has increased U.S. crop insurance losses

Abstract

Quantification of the sector-specific financial impacts of historical global warming represents a critical gap in climate change impacts assessment. The multiple decades of county-level data available from the U.S. crop insurance program—which collectively represent aggregate damages to the agricultural sector largely borne by U.S. taxpayers—present a unique opportunity to close this gap. Using econometric analysis in combination with observed and simulated changes in county-level temperature, we show that global warming has already contributed substantially to rising crop insurance losses in the U.S. For example, we estimate that county-level temperature trends have contributed $US2017 27.0 billion—or 19%—of the national-level crop insurance losses over the 1991–2017 period. Further, we estimate that observed warming contributed almost half of total losses in the most costly single year (2012). In addition, analyses of a large suite of global climate model simulations yield very high confidence that anthropogenic climate forcing has increased U.S. crop insurance losses. These sector-specific estimates provide important quantitative information about the financial costs of the global warming that has already occurred (including the costs of individual extreme events), as well as the economic value of mitigation and/or adaptation options.

Climate change will increase aflatoxin presence in US Corn

“…Aflatoxin risk is measured by the ratio of area with insurance claimed for aflatoxin to insured area in a county. The USDA Risk Management Agency (RMA) provides county level insurance information such as premium, reported area and indemnity for aflatoxin, which we use as a proxy for nation-wide aflatoxin risk in commercial corn fields [5]. Specifically, we obtained data on acres with crop insurance claims regarding aflatoxin and then divided these by insured acres.…”

“…We estimate future indemnity per premium and then translate this to the total indemnity through multiplying by average premium per county. Each year's indemnity was converted to 2021 dollars using the consumer price index [5]. Figures 3(c Table 2 shows expected changes in aflatoxin risk and indemnities by state.…”

“…Temperature effects have been demonstrated to have a compounding influence on both average crop yields and yield risks, have already begun to produce discernible effects, and can operate through biotic channels like pest damage [1,2] and abiotic channels encompassing both heat-and water-related stress, according to numerous studies [3][4][5][6][7][8][9][10][11][12][13]. Aflatoxin contamination is one of these risks, as it is likely to increase under a changing climate because of its association with warm and dry temperatures [14,15].…”

National attribution of historical climate damages

“…While previous studies have illustrated the economic harms of global warming, our work shows that these harms can be assigned to individual emitters in a way that rigorously accounts for the compounding uncertainties at each step of the causal chain from emissions to local impact. Finally, it is worth noting that our approach can be generalized to other actors, such as individual firms (Ekwurzel et al, 2017;Heede, 2014;Licker et al, 2019), or to other harms, such as the economic losses suffered by farmers due to extreme heat (Diffenbaugh et al, 2021). These results therefore contribute to resolving a key barrier to climate liability efforts and advance these critical emerging discussions.…”

Integrating prevention into the risk management policy toolkit: A strategy for improving resilience to extreme events

“…Although aggregate data on crop insurance indemnities published by the U.S. Department of Agriculture's Risk Management Agency (RMA) are one of the most comprehensive loss databases available, these data do not mirror the pronounced upward trend in damages seen in the broader economy. However, a recent analysis of county-level trends has found evidence that increased temperatures from global warming have increased crop insurance losses (Diffenbaugh et al, 2021). The passage of recent ad hoc disaster assistance packages [the Wildfire and Hurricane Indemnity Program (WHIP) for 2017 losses and WHIP+ for losses in 2018 and 2019, recently extended to include losses for 2020 and 2021] offer an additional measure of damages to agriculture from recent extreme weather, one perhaps more indicative of the range of commodities and extent of losses resulting from these types of events.…”