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Crop insurance, disaster payments, and land use change: the effect of sodsaver on incentives for grassland conversion

Abstract::
Subsidized crop insurance may encourage conversion of native grassland to cropland. The Sodsaver provision of the 2008 farm bill could deny crop insurance on converted land in the Prairie Pothole states for 5 years. Supplemental Revenue Assistance payments, which are linked to crop insurance purchases, could also be withheld. Using representative farms, we estimate that Sodsaver would reduce expected crop revenue by up to 8% and expected net return by up to 20%, while increasing the standard deviation of revenue by as much as 6% of market revenue. Analysis based on elasticities from the literature suggests that Sodsaver would reduce grassland conversion by 9% or less.
Author(s):
Claassen, Roger , Cooper, Joseph C. , Carriazo, Fernando
Subject(s):
crop insurance , disaster assistance , land use change , grasslands , revenue insurance , prairies , agricultural land , land management , agricultural subsidies , Prairie Pothole region
Description:
Includes references
Source:
Journal of agricultural and applied economics 2011 May, v. 43, no. 2
Language:
English
Year:
2011
Collection:
Journal Articles, USDA Authors, Peer-Reviewed
File:
Download [PDF]   
Rights:
Works produced by employees of the U.S. Government as part of their official duties are not copyrighted within the U.S. The content of this document is not copyrighted.