Understanding the effect of cover crop use on prevented planting losses

Abstract

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.

Are crop insurance discount programs for cover crops effective? Evidence from Iowa

“…In fact, the program seems to fare well compared to other programs in terms of the cost per additional area, which is $43 per acre ($106 ha −1 ) for ICIDP. In addition to our finding that the ICIDP generates reasonable additionality, the linkage between larger cover crop area and lower crop insurance prevented planting indemnities (Won et al., 2023) also supports the existence of crop insurance discount programs.…”

Conservation intensification under risk: An assessment of adoption, additionality, and farmer preferences

“…Farmers using cover crops may experience benefits that can offset the cost of this practice. For example, a study by Won et al (2023) shows cover crop use is associated with low insurance losses due to preventing planting. This and other studies stress the importance of communicating agronomic and economic benefits when promoting the adoption of conservation practices (Buck & Palumbo‐Compton, 2022; Davidson et al, 2019; Fleming et al, 2019).…”

Farmland rental and conservation practice adoption

“…CCs have been demonstrated to improve soil health, prevent water and wind erosion, improve the availability of soil water, suppress weeds, and feed cattle, among other benefits (USDA, NRCS, 2021). Cover cropping is classified as a medium-run practice because any improvements to soil health and stability may result in increased resilience to adverse weather events and reduced crop insurance claims in the medium-to long-run (Won et al, 2023). The conventional wisdom that farmland tenants are more interested in short-run economic gains because increases in asset value from land improvement only accrue to landowners may suggest that renters are less inclined to adopt CC practices due to the upfront costs.…”