Findings from North Carolina State University Provide New Insights into Crop Insurance (Unintended Environmental Benefits of Crop Insurance: Nitrogen and Phosphorus In Water Bodies): Agriculture – Crop Insurance

2023 APR 11 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Investigators publish new report on Agriculture - Crop Insurance. According to news reporting out of Raleigh, North Carolina, by NewsRx editors, research stated, “Agricultural policies without explicit environmental goals can indirectly affect the natural environment through its effect on farmer input use behavior. For example, the highly-subsidized crop insurance program in the United States (US), while developed to protect farmers against yield and revenue risks, also has the potential to influence fertilizer and land use decisions, which can then impact the extent of excess nitrogen and phosphorus that can run-off and pollute nearby water bodies.”

Financial support for this research came from USDA NIFA Hatch Project.

Our news journalists obtained a quote from the research from North Carolina State University, “This study utilizes county-level panel data from 1989-2015 to directly evaluate the impact of crop insurance participation on nitrogen and phosphorus concentration in waterways. Results from linear panel fixed effects (FE) models suggest that counties with higher crop insurance participation tend to have lower nitrogen concentrations in its water bodies, but the effects are small. In contrast, we do not find a consistent statistically significant crop insurance effect on phosphorus concentrations. Findings based on alternative estimation techniques and other empirical specifications generally support our baseline FE model results.”

According to the news editors, the research concluded: “We posit that the modest crop insurance effects may be due to two competing mechanisms - the moral hazard effect of crop insurance (i.e., reducing fertilizer use), being counteracted by the incentive to bring in riskier crops or marginal land to production (i.e., increasing fertilizer use).”

This research has been peer-reviewed.

For more information on this research see: Unintended Environmental Benefits of Crop Insurance: Nitrogen and Phosphorus In Water Bodies. Ecological Economics, 2023;204. Ecological Economics can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands. (Elsevier - www.elsevier.com; Ecological Economics - http://www.journals.elsevier.com/ecological-economics/)

Our news journalists report that additional information may be obtained by contacting Roderick M. Rejesus, North Carolina State University, Dept. of Agricultural and Resource Economics, Raleigh, NC 27695, United States. Additional authors for this research include Xun Lu, Yuyuan Che, Barry K. Goodwin, Sujit K. Ghosh and Jayash Paudel.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.ecolecon.2022.107657. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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