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The Impact of Cost-of-Production Insurance on Input Expense of Fruit Growing in Ecologically Vulnerable Areas: Evidence from Shaanxi Province of China

by 1,*,†, 2,*,†, 1, 3, 1 and 1
1
College of Economics and Management, Northwest A&F University, Xianyang 712100, China
2
College of Life Science, Northwest A&F University, Xianyang 712100, China
3
Sanford Burnham Prebys Medical Discovery Institute, San Diego, CA 92037, USA
*
Authors to whom correspondence should be addressed.
These authors contributed equally to this work.
Academic Editor: Antonio Boggia
Sustainability 2021, 13(21), 12083; https://doi.org/10.3390/su132112083
Received: 26 September 2021 / Revised: 27 October 2021 / Accepted: 28 October 2021 / Published: 1 November 2021
Planting fruit trees in ecologically vulnerable areas is an effective approach to achieving the goal of ecological protection and improving farmers’ livelihoods. However, in ecologically vulnerable areas, farmers still face agricultural production risks such as natural disasters, diseases, and pests. In order to help fruit growers avoid these risks and ensure the sustainability of their livelihoods, the Chinese government has launched cost-of-production (COP) insurance in these areas. Although previous studies have shown that the purchase of revenue- or yield-based crop insurance will change insured farmers’ input expense of chemicals in agricultural production, the existing literature lacksa discussion on how COP insurance affects the input expense of chemicals in fruit growing. Here, we address the existing research gap from both theoretical and empirical aspects by conducting surveys in 1051 households of fruit growers in the Shaanxi province of China. Theoretical deduction reveals that the COP insurance on input expenditure of chemicals can have an increasing effect. Using the 2SLS model and empirical analysis, we found that the insured fruit growers spent more on using chemical fertilizers and pesticides compared to non-insured fruit growers. These findings demonstrate that the COP insurance’s positive marginal incentive to apply more input expense of chemicals in production dominates the negative moral hazard effect. View Full-Text
Keywords: cost-of-production insurance; input expense; sustainability of fruit grower’ livelihood cost-of-production insurance; input expense; sustainability of fruit grower’ livelihood
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MDPI and ACS Style

Li, T.; Chen, L.; Li, X.; Li, S.; Chen, H.; Ji, H. The Impact of Cost-of-Production Insurance on Input Expense of Fruit Growing in Ecologically Vulnerable Areas: Evidence from Shaanxi Province of China. Sustainability 2021, 13, 12083. https://doi.org/10.3390/su132112083

AMA Style

Li T, Chen L, Li X, Li S, Chen H, Ji H. The Impact of Cost-of-Production Insurance on Input Expense of Fruit Growing in Ecologically Vulnerable Areas: Evidence from Shaanxi Province of China. Sustainability. 2021; 13(21):12083. https://doi.org/10.3390/su132112083

Chicago/Turabian Style

Li, Tao, Lihong Chen, Xiaoxu Li, Sha Li, Haibing Chen, and Hao Ji. 2021. "The Impact of Cost-of-Production Insurance on Input Expense of Fruit Growing in Ecologically Vulnerable Areas: Evidence from Shaanxi Province of China" Sustainability 13, no. 21: 12083. https://doi.org/10.3390/su132112083

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