DOES AGRICULTURAL INSURANCE HELP ENHANCE CROP YIELD? EVIDENCE FROM CHINA’S CLIMATE RISK ADAPTATION STRATEGIES

Abstract

The purpose of this study is to analyse the impact of insurance on crop yield in the Chinese agricultural sector against unfavourable climatic factors causing the losses of crop harvest and their impacts on the insurance premiums and the indemnity for damage. Using a dataset of five key crops in China from 1996–2023, this study employs a simultaneous equation model and comparative analysis to investigate the relationship between insurance and agricultural productivity.

Results highlight that agricultural insurance premiums have a positive and significant impact on crop yields, reinforcing their role in risk mitigation for farmers. Additionally, the findings show that higher indemnities correlate with increased farmer participation in insurance programs.

The study raises awareness and highlights the need for stronger regulatory frameworks to enhance insurance penetration in agriculture. Policymakers should focus on subsidy mechanisms and education programs to promote insurance awareness among farmers.

This study extends previous literature by integrating updated datasets, refining econometric models, and addressing recent policy developments. The findings of the study also contribute to the literature on agricultural risk management and financial sustainability in emerging economies.