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Risk Management Strategies in Humid Production Regions: A Comparison of Supplemental Irrigation and Crop Insurance

Published online by Cambridge University Press:  15 September 2016

Timothy J. Dalton ,
Gregory A. Porter  and
Noah G. Winslow
Timothy J. Dalton
Affiliation:
Department of Resource Economics and Policy, University of Maine
Gregory A. Porter
Affiliation:
Department of Plant, Soil, and Environmental Science, University of Maine
Noah G. Winslow
Affiliation:
Department of Agricultural Economics, Purdue University
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Abstract

Recent federal agricultural programs have accelerated the devolution of enterprise risk management responsibility from the state to individual producers. Using a biophysical simulation model, the risk management benefits of federal crop insurance and supplemental irrigation are derived and compared to uninsured rainfed crop production in an expected utility framework. Federal crop insurance programs are inefficient at reducing producer exposure to weather-related production risk in humid regions, and the risk management benefits from supplemental irrigation are found to be scale and technology dependent. Environmental policies that regulate resource development will increase the investment cost of irrigation alternatives and reduce economic feasibility.

Keywords

insurancerisksupplemental irrigation
Type
Articles
Information
Agricultural and Resource Economics Review , Volume 33 , Issue 2 , October 2004 , pp. 220 - 232
Copyright
Copyright © 2004 Northeastern Agricultural and Resource Economics Association 

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