Cover Crops and Prevented Plantings in the US Midwest

• Agricultural Economics Workshop

Date and Location

Thursday, May 5, 2022, 4:10 PM - 5:30 PM
Online Meeting, Zoom

Abstract

The effect of cover cropping on various agricultural production outcomes has been a topic of recent interest given its potential to improve resilience against climate-change-induced extreme weather events. Using a novel data set that combines satellite-based cover crop information and county-level crop insurance data, we examine the impact of planting cover crops on prevented-planting-related losses that are typically caused by heavy rainfall events. The US federal crop insurance program offers “prevented planting” coverage which pays indemnities if insured growers are unable to plant their crop due to adverse weather. Linear fixed effects models, instrument-based estimation methods, long-difference models, and a number of other robustness checks are utilized in the empirical analysis to achieve the study objective. Our findings suggest that counties with higher cover crop adoption rates tend to have lower levels of crop insurance losses due to prevented planting. The resulting reduction in prevented planting risk also becomes larger with longer-term multi-year cover crop use. These results support the notion that cover crops improve soil conditions such that the likelihood and magnitude of prevented planting losses decrease. We posit that the ability of cover crops to deal with excess moisture (i.e., through better water absorption and improved water infiltration in the soil) is the main factor in its ability to reduce prevented planting losses in the US Midwest.