Thread by @RobertFinger1

In a recent paper, we found that without crop #insurance being in place, #pesticide expenditures in France and Switzerland would be 6 to 11% lower.

Here a #thread on the relevance of these findings, the underlying mechanisms and policy implications

Cc @tobi_dal @aecp_eth

Reducing risks from pesticide use for humans and the environment is on the top of European policy agendas. Also the support of risk management and insurance solutions, e.g. via subsidies, is gaining relevance in Europe. Especially in light of #climatechange impacts on agriculture

The availability and support of agricultural insurance, however, also affects pesticide use. This is linkage is usually not considered in policy making. Two effects are especially relevant:

First, insurance can affect intensity of pesticide use (intensive margin) in cultivated crops. The direction depends on risk effects of pesticides. Insurances may be substitutes (pesticides decrease farmers' income risk) or complements to pesticide use (pesticides increase risk)

Second, insurance can potentially induce extensive margin effects on pesticide use when it creates incentives to switch from pesticide-extensive forms of land use (e.g. fallow land, temporary grasslands or extensively grown crops) to more pesticide-intensive crops.

We investigate farmers’ decisions on insurance uptake, land use and pesticide use – as well as their interdependencies. We use farm-level, panel data sets from France and Switzerland. In both countries insurance penetration and support is still far lower than in the US.

We find availability of crop insurance to increase pesticide expenditures by 6-11%. (Note: expenditure is not equal risk for humans and environment). Mechanisms differ: While the extensive margin effect is dominant for Switzerland, it is the intensive margin effect for France

This does not at all imply that crop insurance is bad. In contrast, crop insurance is a crucial risk management instrument for farmers, and this is gaining importance. But, there are unintended side-effects. These need to be accounted for

Current support for crop insurance does not improve environmental performance of agriculture. But it should – especially as a lot of money is spend. Thus, we need to develop sustainable insurance solutions, that are good for farmers and the environment

sciencedirect.com/science/articl…

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