Crop losses from climate crisis cost billions of dollars in insurance payouts
Source: Middle East Insurance Review | Mar 2022
US farmers received more than $143.5bn in federal crop insurance payments from 1995 through 2020, with just under two-thirds paid out for crop damage from drought and excess moisture exacerbated by the climate crisis, according to US Environmental Working Group’s new crop insurance database.
These astronomically high payments are in addition to $103.5bn in subsidies that went toward farmers’ crop insurance premiums.
The ‘cause of loss’ is the main reason for a reduction in crop yield or revenue that triggers a crop insurance payment. Causes of loss are factors that damage crop yield, such as drought, excessive rain or hail, or a decrease on the price side of farmer revenues, such as a decline in crop price.
Many crop insurance causes of loss result from adverse weather, which is made worse by the climate emergency. So insurance losses are also directly tied to climate change. As extreme weather has become more frequent, the climate crisis has already increased insurance payments and premium subsidies. These costs are expected to go up even more, as climate change causes even more unpredictable weather conditions.
The upcoming farm bill, which congress will consider in 2023, is a once-in-a-lifetime chance to reform federal farm policies, including crop insurance, so they encourage farmers to adapt to climate change and reduce emissions before it’s too late. Making changes to these programmes now will be essential to make US agriculture more resilient to the extreme weather that lies ahead. M