Policy Studies Insurance

Environmental Benefits of Crop Insurance Reform


Caroline Melear
Resident Fellow, Finance, Insurance and Trade

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Executive Summary

Of all the farm subsidies and programs, the Federal Crop Insurance Program (FCIP) is among the least adept at encouraging program participants to adjust farming practices to focus on resilience and sustainability. Many aspects of the FCIP unintentionally encourage environmental harm by structuring payouts that encourage agribusiness to plant as much as possible in order to receive the largest taxpayer subsidies. This causes a strain on resources, harms topsoil and groundwater, depletes nutrient density in soil and crops, and leads to air and water pollution.

An overhaul of FCIP practices is necessary to incentivize environmental sustainability, resilience and mitigation. Appropriate changes can both benefit the environment and incur savings for taxpaying Americans who currently fund the majority of crop insurance premiums.