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Regarding environmental consequences of subsidized crop insurance, the paper states that subsidies for crop insurance may affect environmental consequences through several channels including: •
Incentives to expand onto more environmentally sensitive lands;
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Incentives to use more inputs as average returns rise;
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Incentives to shift across crops toward those, such as cotton, that may have more negative environmental consequences;
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Incentives to use fewer risk-reducing practices and materials; and
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Impact from the lack of environmental or conservation compliance rules for crop insurance as have applied to land under the traditional crop subsidy programs.
Economic and Environmental Effects of Agricultural Insurance Programs