Government subsidized crop insurance has been used by a number of developed countries as a mechanism to reduce farm income instability by reducing yield risks. This book provides an in-depth analysis and evaluation of government provided crop insurance in developed countries. The book is organized into three sections: Part one presents background material on crop insurance programs in the U.S., Canada and selected other countries. Part two provides some analytical models of multiple peril crop insurance which suggest the possibility of modification of design which could improve performance and which explores theoretical linkages between crop insurance decisions and other producer decisions previously not analyzed. The main part of the book is Part three, where the results of a series of empirical studies using databases particularly designed to answer crop insurance questions are presented. This part of the book tests a number of the hypotheses which were raised in Parts one and two regarding reasons for the view widely held by economists that crop insurance has not functioned well.

This study is the first to provide a comprehensive and in-depth economic analysis of the origins and consequences of U.S. crop insurance and disaster relief programs. The authors investigate the policy options for disaster assistance and crop insurance, beginning with the recognition that current policies are unsatisfactory.

This dissertation develops a novel theoretical framework of heterogeneous producers to analyze the system-wide market and welfare effects of crop insurance and the determinants of the optimal policy design under alterative information structures and government policy objectives. The framework captures the empirically relevant differences in producer attitudes towards risk and their impact on crop insurance participation under different insurance contracts and premium subsidies. The explicit consideration of producer heterogeneity enables also the proper identification and disaggregation of the distributional impacts of crop insurance, and the evaluation of the role of multiple contracts and premium subsidies in policy design. Analytical results indicate that producer welfare gains from crop insurance increase with the level of producer risk aversion and insurance coverage. The provision of different crop insurance contracts results in a separating equilibrium, where different producer groups choose different contracts. The disaggregated welfare impacts of changes in contract availability are determined by the relative differences in premium rates and reduction in risk exposure among the insurance options. Changes in premium subsidies are shown to cause contract-specific participation and welfare changes, with asymmetric benefits for the different policy participants. Regarding the optimal policy design, the study identifies (a) the determinants of the optimal level of premium subsidies and (b) their role in coping with informational asymmetries, under different objectives and political preferences of the government. The analysis shows how premium subsidies can be utilized to induce producer behavior leading to a desired separating equilibrium and presents an alternative policy design that can more efficiently achieve the government objective of increased producer participation in crop insurance. Finally, by utilizing highly detailed crop insurance data, the study empirically tests and quantifies the system-wide effects of crop insurance, the impact of premium subsidies on participants' welfare, and identifies crop and regional differences. Empirical results are consistent with/support the theoretical findings indicating that producer benefits from crop insurance increase with the level of producer risk aversion, high coverage and regional riskiness. The change in the magnitude of premium subsidies in 2000 resulted in increased producer welfare and spatial differences in private insurers' returns.

Agricultural yields have increased steadily in the last half century, particularly since the Green Revolution. At the same time, inflation-adjusted agricultural commodity prices have been trending downward as increases in supply outpace the growth of demand. Recent severe weather events, biofuel mandates, and a switch toward a more meat-heavy diet in emerging economies have nevertheless boosted commodity prices. Whether this is a temporary jump or the beginning of a longer-term trend is an open question. Agricultural Productivity and Producer Behavior examines the factors contributing to the remarkably steady increase in global yields and assesses whether yield growth can continue. This research also considers whether agricultural productivity growth has been, and will be, associated with significant environmental externalities. Among the topics studied are genetically modified crops; changing climatic factors; farm production responses to government regulations including crop insurance, transport subsidies, and electricity subsidies for groundwater extraction; and the role of specific farm practices such as crop diversification, disease management, and water-saving methods. This research provides new evidence that technological as well as policy choices influence agricultural productivity.