Abstract
Recent proposals to reform the federal Multiple-Peril Crop Insurance Program for specialty crops raised concerns that a higher cost for catastrophic-level coverage would significantly reduce program participation. This study estimates the demand for three levels of insurance coverage (50%, 65%, 75%) using aggregate data from grape production in 11 California counties from 1986-96. A discrete/continuous econometric model of the choice of coverage level and the amount of insurance finds that the price-elasticity of demand for 50% coverage is elastic, suggesting that premium increases may indeed reduce participation significantly. Such increases may also cause a significant reallocation of growers among coverage levels.
Original language | English (US) |
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Pages (from-to) | 177-194 |
Number of pages | 18 |
Journal | Journal of Agricultural and Resource Economics |
Volume | 25 |
Issue number | 1 |
State | Published - Jul 1 2000 |
Keywords
- California
- Crop insurance
- Discrete/continuous choice
- Grapes
- Ordered probit
ASJC Scopus subject areas
- Animal Science and Zoology
- Agronomy and Crop Science
- Economics and Econometrics