The Impact of Rice Insurance on Farmers’ Cultivation Practices: A Micro Case of Guangdong Province in China

Abstract

This study investigates the impacts of government subsidized crop insurance on farmers’ rice cultivation practices using household survey data in Guangdong province, China. Although the insurance is compulsory, only some of the beneficiaries are aware of being insured by this insurance. Utilizing the diversity of insurance awareness, the effect of insurance is evaluated employing an endogenous treatment-effect model, which addresses the endogeneity of farmers’ awareness of being insured. The results show that farmers who are aware of being insured increased rice cultivation area by specializing in rice and probably adopting double cropping. As a result, total rice production increased significantly.