Files
Abstract
This paper integrates economic and physical models to assess how federal crop revenue
insurance programs might affect land use, cropping systems, and environmental quality in the
U.S. Corn Belt region. The empirical framework includes econometric models that predict land
conversion, crop choices, and crop rotations at the parcel level based on expectation and variance
of crop revenues, land quality, climate conditions, and physical characteristics at each site. The
predictions are then combined with site-specific environmental production functions to
determine the effect of revenue insurance on nitrate runoff and leaching, soil water and wind
erosion, and carbon sequestration. Results suggest that crop insurance will have small impacts on
conversions of non-cropland to cropland, but more significant impacts on crop choice. These
changes in crop mix have moderate impacts on agricultural pollution.