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Abstract
Government programs that help agricultural producers manage risk may have environmental
consequences. In recent years, premium subsidies for crop insurance have been increased
substantially to encourage greater producer participation. Using detailed, producer-level crop
insurance contract data in four regions, we investigate whether adverse environmental effects have
resulted from these increased subsidies. We find some association between environmental effects
and insurance contracts. On average, however, we find that environmental effects are generally
small and as often beneficial as adverse. More importantly, we find that results are specific to local
conditions and to particular environmental indicators and may be hidden in aggregate analysis.