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Agricultural and Resource Economics Review >
Volume 37, Number 1, April 2008 >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/44741
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| Title: | Modeling Exit and Entry of Farmers in a Crop Insurance Program |
| Authors: | Cabas, Juan H.
Leiva, Akssell J.
Weersink, Alfons |
| Keywords: | crop insurance
entry and exit
panel data |
| Issue Date: | 2008-04 |
| Abstract: | This paper examines the factors influencing farmer participation in crop insurance schemes,
but unlike previous studies that focus on total demand, participation is disaggregated into entrants
and those exiting. Modeling entry and exit decisions separately illustrates that the effect
of a given variable is often muted by aggregation. In addition, the approach in this paper distinguishes
between price and yield variables rather than total returns and is consequently able
to demonstrate that price variables are particularly important for farmers considering enrolling
in crop insurance, while yield variables and other risk management opportunities are more important
for farmers who have been in the program but are deciding to exit. The result suggests
that moral hazard is reduced significantly by calculating the coverage yield level for an individual
producer on the basis of a moving average of past yields for that farmer. While yield
and its variance are particularly influential in the participation decision for farmers currently
enrolled, its significant impact on the insurance decision for all farmers highlights the importance
of crop insurance as a potential adaptation strategy to weather events. |
| URI: | http://purl.umn.edu/44741 |
| Institution/Association: | Agricultural and Resource Economics Review>Volume 37, Number 1, April 2008 |
| Total Pages: | 14 |
| From Page: | 92 |
| To Page: | 105 |
| Collections: | Volume 37, Number 1, April 2008
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Files in This Item:
| File |
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Size | Format |
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| cabas - current.pdf | | 258Kb | PDF | View/Open |
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