Semester of Graduation

Spring 2022

Degree

Master of Science (MS)

Department

Agricultural Economics and Agribusiness

Document Type

Thesis

Abstract

Cover crop’s value from a policy perspective lies in potential environmental benefits if used en masse including waterway protection from farm runoff, reducing soil erosion, and sequestering carbon. The ultimate decision to adopt cover crops lies with farmers however and their decisions are largely driven by business performance. Because of this, economic research into cover crops has mostly revolved around factors influential to farmer’s adoption decisions with direct and indirect policy effects being lesser researched. Crop insurance, a nearly ubiquitous federally administered risk management tool for farms in the United States, is often cited as a suspected negative influence for the adoption of cover crops. Little is known about how cover crops and crop insurance interact despite the suspected interference of crop insurance on adopting cover crops. This study investigates how a hairy vetch treatment on cotton yields are likely to affect crop insurance claims. We conduct our study by looking at the extensive and intensive margins of crop insurance payouts for cotton farm adopting hairy vetch. Additionally, this study investigates how insurance payouts change at various coverage levels, effectively determining the catastrophic and shallow loss changes to yield risk from cover crop adoption. Findings indicate that cover crops perform well in reducing the intensive and extensive margins of catastrophic losses, but not as well for reducing shallow losses. Hairy vetch when paired with cotton in this setting appears to be a useful tool for reducing risk when ensuring a crop at high coverage levels and provides little benefits when insuring at low coverage levels.

Committee Chair

Connor, Lawson

DOI

10.31390/gradschool_theses.5481

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