A Spatial Econometric Analysis Of Crop Insurance, Climate Change, And Us Corn Acreage

Abstract

A spatial econometric approach is employed to investigate the impact of insurance subsidies and expected growing season weather on corn acreage in the United States. Increases in insurance subsidies and expected returns on insurance have a marginal impact on planted acreage in the Corn Belt. Expected temperature and precipitation, typically overlooked in the literature, are significant determinants of planted acreage. Furthermore, acreage response to temperature varies according to latitude and may partly explain the increases in corn acreage in the Northwestern Corn Belt over time. The spatially heterogeneous relationship between temperature and planted acreage response has important implications for acreage choices under various climate change scenarios.