Climate Change and Agriculture: The Role of Insurance and Collaboration in Building Resilience

What is it about?

This study examines the dual pressures climate change places on agriculture: reducing carbon emissions and managing climate risks. It focuses on China’s agricultural sector, using panel data from 31 provinces from 2003 to 2023 to analyze the impact of climate change risks (CPRI) on green, low-carbon agricultural development (GAC). The research also investigates the moderating role of agricultural insurance (INS) and spatial spillover effects. The findings reveal that CPRI significantly inhibits GAC, particularly in non-major grain-producing regions and in eastern China. Extreme weather events, such as floods and droughts, result in short-term decision-making by farmers, constraining investments in green technologies and reducing soil carbon sequestration. This inhibitory effect is more significant in the aforementioned regions. The study also identifies that CPRI leads to harmful spatial spillover effects, where indirect impacts across neighboring regions are greater than direct effects within the affected areas. Agricultural insurance (INS) plays a vital role in mitigating these adverse impacts by offering effective risk transfer mechanisms. INS helps reduce the negative effects of extreme weather by providing farmers with financial security, allowing them to continue investing in sustainable practices. In conclusion, the study finds that CPRI significantly hinders the transition to green agriculture, a process that is moderated by insurance and characterized by spatial spillovers. Based on these findings, the study recommends the development of region-specific adaptation strategies, innovation in agricultural insurance products, and the establishment of collaborative governance frameworks that span regions to effectively address the challenges posed by climate change risks and promote green agricultural development.

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Photo by Michael and Griselle Martinez on Unsplash

Photo by Michael and Griselle Martinez on Unsplash

Why is it important?

This study is important because it addresses the significant challenges that climate change poses to agriculture, particularly the dual pressures of reducing carbon emissions and managing climate-related risks. These pressures are crucial for the transition to green, low-carbon agricultural development, which is vital for both environmental sustainability and food security. The research is essential because it highlights how climate change risks (CPRI) significantly inhibit green agricultural transition (GAC). It emphasizes that extreme weather events not only disrupt farming decisions in the short term but also hinder investment in green technologies and reduce carbon sequestration in soils. This is especially impactful in non-major grain-producing regions and eastern China, where the effects of CPRI are most severe. The study also underscores the role of agricultural insurance (INS) in mitigating these negative impacts. By offering risk transfer mechanisms, INS helps farmers cope with the financial burden of extreme weather events, allowing them to continue investing in sustainable practices and technologies. This aspect of the research is critical for promoting agricultural resilience to climate risks. Furthermore, the study sheds light on the spatial spillover effects of CPRI, demonstrating that these impacts extend beyond the directly affected regions, with greater indirect effects than direct ones. This insight is important for understanding the broader geographical implications of climate change on agricultural development. The findings are of great significance to policymakers, agricultural stakeholders, and insurance providers, as they advocate for region-specific adaptation strategies, innovations in agricultural insurance products, and the creation of collaborative governance frameworks. These strategies are essential for addressing the wide-ranging challenges that climate change poses to agriculture and for promoting a more sustainable and resilient agricultural sector.

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