Encouraging Climate Adaptation Through Reform of Federal Crop Insurance Subsidies

Ann Jaworski
Climate change is expected to have immensely detrimental effects on agriculture. Changing climate patterns will also make many locations inhospitable to the crops currently grown there. In order to mitigate the effects of climate change on agriculture, farmers should adapt by changing the mix of crops grown in a given location. Federal crop insurance masks incentives American farmers would otherwise have to adapt to climate change through crop choice. Large premium subsidies—with most insured farmers paying less than half of the actuarially sound premium—are a huge part of this problem. This Note explains the connection between crop choice and climate change. It then analyzes existing proposals for reforming the crop insurance system to better incentivize adaptation to climate change, and highlights some political and practical obstacles to doing so. Finally, it argues that a tiered subsidy system—in which crops at high risk of failure due to location-specific climate risks would receive lower subsidies—could be a feasible, incremental solution to the problem.
This article appears in the December 2016 Issue: Volume 91, Number 6