Cécile AUBERT

 

Abstract:
The adoption of agricultural innovations is largely influenced by how farmers process information, learn about risks, and manage risks and uncertainties. This applies to the adoption of agroecological cultivation practices as well as recommendations from digital tools. Since risk is a major aspect of decision-making, crop insurance has been suggested as an instrument to favor ecological transition and the adoption of « greener » practices.

This talk will present several findings on how crop insurance can help reduce pesticide use. They initiate from a real experiment with an insurer and wine-growers (for whom the end-product has a very high value and pesticides are extremely cheap and effective, resulting in excess use).

I will first summarize the findings of a choice experiment with winegrowers. It shows how they value different characteristics of an insurance contract conditional on using a decision-support system (DSS). I will then present a theoretical model of green insurance as a tool to induce DSS adoption. The quality of the DSS recommendations is unknown, so learning occurs and changes the incentives to experiment. A subsidized conditional crop insurance can induce experimentation. We find however that learning can be slow and that it can also be incorrect, even for risk-neutral farmers. If farmers have preferences that depart from subjective expected utility, the difficulty to induce experimentation and innovation adoption tend to become worse.