Farm heterogeneity and leveraging federal crop insurance for conservation practice adoption

Abstract

Current and proposed policies aim to leverage the Federal Crop Insurance Program (FCIP) to promote conservation practices. This study uses corn farm-level survey data to inform the effectiveness of targeting FCIP participants. We implement an unsupervised machine learning algorithm to assess what conservation practices are most common among participants. We find that farms that use crop insurance have higher adoption rates for practices that are generally profit-maximizing. We also calculate nitrogen balance, a yield-scaled measure of nitrogen fertilizer's potential environmental impact. We find a positive relationship between crop insurance and nitrogen balance closer to the optimum.