The crop insurance demand response to the Wildfire and Hurricane Indemnity Program Plus. Issue 3 (20th July 2022)

• Record Type: Journal Article
• Authors: Turner, Dylan; Tsiboe, Francis
• Is Part Of: Applied economic perspectives and policy. Volume 44:Issue 3(2022)
• Page Start: 1273
• Page End: 1292
• Publication Date: 2022-07-20
• Subjects: crop insurance -- disaster aid -- moral hazard -- risk management -- WHIP; Agriculture -- Economic aspects -- Periodicals; Agriculture and state -- Periodicals; 338.105
• DOI: 10.1002/aepp.13314
• Languages: English
• ISSNs: 2040-5790

Abstract

Abstract: Previous literature has suggested that ad hoc disaster aid can crowd out demand for residential flood insurance. However, this phenomenon remains relatively unexplored in the agriculture insurance sector. In this paper, we focus on the most recent ad hoc disaster aid program for US agricultural producers, the Wildfire and Hurricane Indemnity Program Plus (WHIP+). Using county‐level data on WHIP+ payments, we find support for the program crowding out demand for crop insurance. However, we find the issue to be nuanced, noting that the demand response to WHIP+ payments is subject to heterogeneity across several dimensions including commodity, insurance plan, and coverage level.