Does crop insurance impact water use

Abstract

Crop insurance has become an important part of the national agricultural system in the United States. It was instituted to protect farmer incomes in times of volatile production, for example because of droughts or floods. Although crop insurance was not designed to impact water resources, it may have unintended consequences for water use, because agriculture and water resources are tightly linked. In particular, crop production relies on water as an input, and irrigation for crop production is the largest user of water resources. Thus, if crop insurance changes farmer behavior, it may affect water use as well. Crop insurance is expected to become more important to farmers in the future, as the frequency of production losses increase under a changing climate, such as from droughts, floods, or pest outbreaks. At the same time, a changing climate will affect the availability of water resources. For these reasons, it is important to understand the relationship between crop insurance, agriculture, and water use. Crop insurance is an important component of the agricultural production system in Illinois. As the climate becomes increasingly variable in Illinois (Baylis et al 2015), it will be important to identify opportunities to maintain farmer incomes while also conserving water resources. Since crop insurance has been shown to lead to more water use nationwide, policy makers may want to explore options for insurance policy design that could help mitigate water use. Currently, Illinois does not heavily rely on irrigation supplies for agriculture but may do so as precipitation patterns shift in the future. Now is a good time to start the conversation on potential interactions of crop insurance, agriculture, and water use in Illinois.