In the Mississippi River Region, the Climate Crisis Helped Run Up a $39.5B Taxpayer Bill for Crop Insurance Premiums – InsuranceNewsNet

MINNEAPOLIS – The Environmental Working Group has issued the following news release.

A new Environmental Working Group analysis of Department of Agriculture data shows that crop insurance premium subsidies in Mississippi River region cost taxpayers nearly $39.5 billion between 2001-2020.

The total premium subsidies increased by almost 260% over the same period, from $656.7million to $2.3 billion. The USDA’s Crop Insurance Program, a huge initiative, has seen its prices rise dramatically since the 1990s. This is due to the increased frequency and severity of drought and rainfall linked to the climate crisis. As the crisis gets worse, premium subsidy costs are likely to continue to rise.

Anne Schechinger, EWG Midwest director, and author of the report, stated that “the federal Crop Insurance Program needs to be reformed in order to encourage farmers to adapt to an ever-changing climate before costs spiral out of control.” “The USDA should begin by reducing premium subsidies to environmentally sensitive areas, such as those found in many parts the Mississippi River Region.

EWG’s report focuses attention on the Mississippi River Critical Conservation Area or MRCCA. This USDA-designated “area to focus” covers more than 387 million acres in roughly 1,000 counties across 13 States. The region is an integral part of American agriculture and is vulnerable to more extreme weather due to the climate crisis.

EWG analyzed 20 years of data to determine which states received the highest amounts in premium subsidies. They found that Illinois, Iowa and Minnesota combined received more than $22.9 trillion, or 58.5% of total premium subsidies.

EWG’s report describes the many ways USDA’s Crop Insurance Program discourages climate-change-adaptive farmers. It also recommends crop insurance reforms that encourage climate adaptation on-farm, which could reduce taxpayer costs and farmer risks.

The taxpayers pay 60 percent of crop insurance premiums. They also pay some of their share of the costs for indemnities to insured farmers if they suffer losses that exceed premiums.

EWG research shows that U.S. farmers received over $143.5 billion in federal crop insurance indemnity payment payments between 1995 and 2020. This was largely for damage due to extreme weather conditions resulting from the accelerating climate crisis.

The new report builds on previous EWG studies which found that crop insurance indemnity payment to farmers in MRCCA totaled nearly $50 billion between 2001-2020. Nearly $1.5 billion of those payouts were made to farmers for flooding damage. This is enough money to have paid farmers to permanently resign from more than 330,000 acres of floodplains.

Schechinger stated, “As the USDA reviews all of its programs to determine how they can better support climate adaptation or mitigation, the agency should take a hard look at the Crop Insurance Program.” “Crop insurance reforms in the MRCCA are especially important because of the millions of acres of cropland that are critically important and are highly vulnerable to extreme weather wrought from the climate emergency,” Schechinger said.

Report link https://www.ewg.org/research/reforms-federal-crop-insurance-program-can-help-farmers-adapt-climate-crisis-and-cut