The demand for public-private crop insurance and government disaster relief

Insurance premium subsidies and disaster relief payments are government actions that can help to smooth farmers' incomes between years. In the EU crop insurance based on public-private partnership is promoted. We present an analysis based on farmers' stated preferences with split data approach of crop insurance and disaster relief provided by the government. Results reveal that farmers' willingness to pay for crop insurance is conditional on the prospect for government disaster relief. Results show that possibility for disaster relief payments will lead to extensive use of taxpayers' money if crop insurance premiums are subsidized.