Does crop insurance reduce pesticide usage? Evidence from China

• Published in: China economic review Vol. 69; p. 101679
• Main Authors: Feng, Shuaizhang, Han, Yujie, Qiu, Huanguang
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.10.2021
• Subjects: Crop insurance; Environmental sustainability; Food safety; Moral hazard; Pesticides; Crop insurance; Food safety; Environmental sustainability; Pesticides; Moral hazard
• ISSN: 1043-951X; 1873-7781
• DOI: 10.1016/j.chieco.2021.101679

We test how crop insurance participation affects the intensity of pesticide use in China using data on staple crop production from eight provinces. Our preferred specification instruments farmers' decisions of participation in insurance by village-level intensities of promotional activities and controls for province fixed effects. We find crop insurance participation significantly reduces pesticide use intensity. The reduction effect is greater for smaller plots, older farmers, and farmers who are more risk averse. •Moral hazard effect of crop insurance reduces pesticide use intensity in China.•Plots covered by insurance are spent with 52.7% less pesticide per unit of land than those without insurance.•The crop insurance reduces pesticide intensity more for smaller plots and farmers who are older and more risk averse.•Crop insurance program should be promoted because of its effects on food safety and environment.•We call for further reforms in order to promote participation in crop insurance.