Working Paper BETA #2023-38

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Title : Crop Yield Risks and Nitrogen Fertilisation in French Agriculture: Implications for Crop Insurance

Author(s) : Edith Kouakou, Marielle Brunette, Richard Koenig, Philippe Delacote

Abstract : The links between nitrogen uses and insurance are explored in this paper via the comparison of two insurance mechanisms: multi-peril crop insurance currently offered in France, and an index insurance based on area yields. A simulation of the two insurance systems on a data set at plot scale for two crops (maize and grassland) in the French department, Deux-S`evres, over the period 2010-2013, allowed us to define the most advantageous system in terms of yield loss coverage. Using the simulation result, we then modelled the relationship between nitrogen fertilisation and insurance eligibility for each of the two schemes based on a production function that links nitrogen to the yields. We found a mixed effect of nitrogen on insurance eligibility in both schemes for the two crops considered, suggesting that the effects of policies aimed at reducing nitrogen fertiliser use differ depending on the insurance system and the crop type. These results highlight the usefulness of crop-specific insurance contracts and bring insights to the current debates about crop insurance reform in various European countries, including France.

Key-words : Crop Insurance; Nitrogen fertiliser; Risk; French Agriculture.

JEL Classification : Q14; G22; Q50.