The Impact of Ad-hoc Disaster Programs on the Use of Conservation Practices
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The paper estimates the impacts of risk reducing government programs on the use of conservation practices in agriculture. Specifically, conservation tillage or no-till agriculture can be used to reduce
risk from weather shocks while subsidized crop insurance and disaster
payments also reduce risk from weather shocks through financial assistance. The paper examines the extent to which conservation practices
(i.e., private insurance) and government programs (i.e., public insur-
ance) are substitutes for each other. The paper uses data on conservation practices from the Conservation Tillage Information Center.
Results are estimated using instrumental variables and spatial panel
data techniques. The economic model shows that government support
programs and self management of risk through improved production
practices are substitutes. The empirical analysis shows that producers with riskier climate conditions are more likely to use conservation
tillage practices but that recent receipts of ad-hoc disaster payments
and insurance indemnity payments reduce those probabilities.