Business risk management programs and the adoption of beneficial management practices in Canadian crop agriculture

Abstract

Canada's agricultural business risk management (BRM) programs require significant public expenditure, with unclear consequences related to climate change adaptation and mitigation through the adoption of beneficial management practices (BMPs). This study examines the relationship between Canada's current suite of BRM programs and the adoption of practices that mitigate GHG emissions in crop agriculture. We review the impacts of agricultural insurance on climate adaptation and mitigation, identifying impacts on both the intensive and extensive margins of production. We consider five potential program modifications, including: (1) changes in producer insurance premiums in AgriInsurance for the adoption of practices that would decrease the actuarially fair insurance rate if they were properly incorporated in the calculation; (2) dedicated insurance products related to trials of specific BMPs; (3) adjustments to current programs to allow more whole-farm considerations and intercropping; (4) cross-compliance measures on AgriInvest tied to environmental education; and (5) reduced insurance coverage for unfavorable environmental practices. While the effects of these potential modifications remain uncertain, they will drive the data collection process necessary to ensure that Canada's BRM programs play an appropriate role in greenhouse-gas reducing BMP adoption and climate change adaptation and mitigation.