Nonlinear impact of agricultural insurance on agricultural production resilience

Abstract

[Objective] Against the backdrop of heightened climate risk, enhancing the resilience of agricultural production through agricultural insurance is of great significance for ensuring the security of agricultural supply. Although the level of participation in China’s agricultural insurance has been rising, problems such as substandard insurance claims and large regional differences still exist, constraining the effectiveness of the insurance protection. Based on the phased characteristics of agricultural production, this study constructs an analysis framework to examine the impact of agricultural insurance participation level on the resilience of agricultural production, and discusses the threshold effects of the level of insurance claims between the two. [Methods] Based on provincial panel data from 2007 to 2022, the entropy weight method was used to measure agricultural production resilience (including resistance, recovery, and transformation capacities). A panel threshold regression model was employed, using the claims level as the threshold variable, to investigate the nonlinear impact of agricultural insurance participation level on agricultural production resilience. [Results] (1) During the sample period, China’s agricultural production had the strongest recovery capacity, followed by resistance capacity, while transformation capacity was the weakest. (2) Agricultural insurance significantly enhanced agricultural production resilience when the level of insurance claims per capita was below the threshold. Once the threshold was exceeded, the enhancement effects disappeared. (3) By dimension, when the claims level was low, agricultural insurance enhanced resistance and recovery capacities, but suppressed transformation capacity. However, when the claims level was high, the role of agricultural insurance in enhancing resistance capacity significantly weakened. Its role in enhancing recovery capacity reversed into a suppressing effect, and it exerted a positive impact on transformation capacity. (4) Heterogeneity analysis revealed that the threshold effects of agricultural insurance on agricultural production resilience were more pronounced in non-major grain-producing areas and northern regions. [Conclusion] Agricultural insurance enhances the resilience of agricultural production, but this effect is constrained by rising insurance claims. In the future, policies should be promoted through multiple channels to increase farmers’participation in agricultural insurance. Regular assessments of reasonable claim ranges should be conducted to strengthen the capacity for preventing moral hazard.