Agricultural Insurance, Climate Change, and Food Security: Evidence from Chinese Farmers

Abstract

As an effective risk management mechanism, agricultural insurance can reduce the risk of uncertainty in agricultural production and guarantee food security. Based on Chinese provincial panel data from 2003 to 2020, this study uses the Entropy Method to measure food security and systematically examines the impact of climate change and agricultural insurance on food security as well as its mechanisms. The present study found that climate change, especially extreme temperatures, has a significant negative impact on food security and food production. The promotion effect of agricultural insurance on food security increases with increased investments in technology, education, and other factors. Furthermore, our findings suggest the presence of geographical variations in the contribution of agricultural insurance to ensuring food security, with greater coverage in major food-producing regions. Additionally, maize yields are better protected by agricultural insurance than wheat and rice yields. To encourage sustainable agricultural development, the Chinese government should set up a diversified subsidy scheme with various planting scales and plant structures.