USING INSURANCE TO ENHANCE NITROGEN FERTIL1ZER APPLICATION TIMING TO REDUCE NITROGEN LOSSES TO THE ENVIRONMENT

摘要

The advantage of using insurance to help a in adopt a best nitrogen management plan (BNMP) that reduces. the impact of agricultural production on the environment is analytically and empirically demonstrated. Using an expected value analysis, it is demonstrated that an insurance program can be structured so as to reduce a former's cost of bearing the adoption risk associated with changing production practices and, thus, to improve the farmer's CE net return thereby promoting the adoption of a BN/MP. Using the adoption of growing-season only N fertilizer application in Iowa as a case study, it is demonstrated that insurance may be used to promote the adoption of this practice to reduce N fertilizer use. It is shown that it is possible for a manner and an insurance company both to have an incentive to develop an insurance adoption program that will benefit both the farmer and the insurance company, increasing net social welfare and improving environmental quality in Iowa.