Can full-cost insurance enhance agricultural economic resilience?

Abstract

Agricultural insurance is a vital tool for enhancing agricultural economic resilience, ensuring food security and promoting agricultural modernization. This study examines the first batch of full-cost insurance pilot counties in China as case study areas. Based on a comprehensive evaluation index system of agricultural economic resilience, we use county-level panel data from 2015 to 2021 and utilize a Difference-in-Differences (DID) model to evaluate the impact of full-cost insurance on it. The results show that full-cost insurance has a significant positive effect on agricultural economic resilience, improving its three dimensions: resistance capacity, adaptive capacity, and transformative capacity. The heterogeneity analysis further shows that full-cost insurance significantly improves agricultural economic resilience only in regions with high agricultural risk and output, while its effect is not statistically significant in low-risk and low-output areas. The findings provide empirical evidence of how full-cost insurance contributes to agricultural economic resilience and offer policy guidance for optimizing policy-based agricultural insurance schemes.