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Evaluating Changes to Prevented Planting Provision on Moral Hazard

  • Christopher N. Boyer (a1) and S. Aaron Smith (a1)

Abstract

Prevented planting provision in crop insurance protects producers from failure to plant attributable to natural causes. We determined the impact of this provision at various crop insurance coverage levels on prevented planting claims and ex post moral hazard. The moral hazard incentive in the prevented planting provision is stronger for corn than soybeans. Reducing the prevented planting coverage factor for corn could likely reduce moral hazard, but the degree of the reduction will likely depend on the revenue protection coverage level. Conversely, we found moral hazard is unlikely to occur for soybean production regardless of the revenue protection coverage level.

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Copyright

This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.

Corresponding author

*Corresponding author. Email: cboyer3@utk.edu

References

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Evaluating Changes to Prevented Planting Provision on Moral Hazard

  • Christopher N. Boyer (a1) and S. Aaron Smith (a1)

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