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Abstract
We exploit variation in the timing of specialty crop insurance supply to different crops and
counties in California to assess its effect on output as decomposed into yield and harvested
acreage. Four woody-perennial crops and one field-annual crop are used to represent this effect.
We find that the supply of crop insurance has a significant positive effect on output for several
perennial crops and the field crop, but it only has a significant positive effect on yield for certain
perennial crops. These findings suggest that even for disparate crops the supply of insurance
reduces production risks for the insured crops and causes harvested acreage to expand. The
positive significant effect of insurance supply on yield for several of the woody-perennial crops
suggests that, regardless of the effect on acreage, it accelerates growers’ adoption of improved
tree/vine varieties and rootstocks, which are likely to be risk-increasing inputs due to the their
relatively high cost of investment.