Crop Insurance, Land Productivity and the Environment: A Way forward to a Better Understanding

Abstract

Providing farmers with effective risk management tools and increasing the productivity of factors of production, while limiting negative effects on the environment, is an important challenge for the current EU agricultural policy. The aim of this research is to identify and evaluate the relationship between crop insurance and land productivity in the context of environmental effects. The study covered farms with crop insurance participating in the Polish FADN system. The article uses the TOPSIS method of organizing objects. We classify farms in terms of land productivity and examine the relationship between these results and the value of insurance coverage. In our conceptual and empirical framework, we recognize that there is a mutual relationship between crop insurance, land productivity and the environment. Our empirical results show that the level of insurance coverage may support the increase in land productivity, indirectly affecting the environment. Farms with the highest productivity level were characterized by an average value of insurance that was double that compared to farms with the lowest productivity level.