The relationship between agricultural insurance and environmental externalities from agricultural input use: a literature review and methodological approach
New Medit, vol 8, n. 3, (September 2009), pp. 41-48
Jel classification: D810, Q180, Q510
The biological nature of agricultural production processes induce a higher degree of uncertainty surrounding the economic performance of farm enterprises. This has contributed to the development and acceptance of forms of public intervention aimed at reducing income variability that have no parallel in other sectors of the economy. In particular, subsidized crop insurance is a widely used tool. The impact of these programs on the decisions of production generates effects on input use, land use and thus, indirectly, environmental outcomes. The importance of this issue has grown in parallel with the growth in importance of the collective role of agriculture sector that has addressed the recent guidelines adopted by many developed countries. In this paper we performed an overview of literature on the field of environmental externalities of risk management policies in agriculture. Moreover, we tried to emphasize how risk management tools adoption could offset environmental programs which represent a pillar of the reformed CAP. In this context, an overview about Mathematical programming and risk in the farm model to address the effect of crop insurance and environmental payment on the farmers’ production behaviour has been implemented.
uncertainty, risk management, crop insurance, input use decisions, environmental externalities, mathematical programming