empirical analysis of acreage effects of participation in the federal crop insurance program

The extent to which crop insurance programs have resulted in additional land being brought into production has been a topic of considerable debate. We consider multiequation structural models of acreage response, insurance participation, CRP enrollment, and input usage. Our analysis focuses on corn...

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Bibliographic Details
Published in:American journal of agricultural economics 2004-11, Vol.86 (4), p.1058-1077
Main Authors: Goodwin, Barry K., Vandeveer, Monte L., Deal, John L.
Format: Article
Language:English
Subjects:
acreage response
Agribusiness
Agricultural economics
Agriculture
Barley
Cereals
Conservation
corn
Crop insurance
crop production
Fertilizers
Insurance
issues and policy
Land
Land use
Participation
Q120
Q140
Q180
Risk management
Studies
Subsidies
U.S.A
Wheat
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Summary:The extent to which crop insurance programs have resulted in additional land being brought into production has been a topic of considerable debate. We consider multiequation structural models of acreage response, insurance participation, CRP enrollment, and input usage. Our analysis focuses on corn and soybean production in the Corn Belt and wheat and barley production in the Upper Great Plains. Our results confirm that increased participation in insurance programs provokes statistically significant acreage responses in some cases, though the response is very modest in every case. In the most extreme cases, 30% decreases in premiums as a result of increased subsidies provoke acreage increases ranging from 0.2% to 1.1%. A number of policy simulations involving increases in premium subsidies are considered.
ISSN:0002-9092
1467-8276
DOI:10.1111/j.0002-9092.2004.00653.x