Environmental implications of crop insurance subsidies in Southern Italy

The changing environment affects agriculture with uncertainty. On the other hand, policies to cope with risks may have strong impacts on the environment. We evaluate the effects of public risk management programmes, such as subsidized crop insurance, fertilizer use and land allocation to crops. We implement a mathematical programming model of a representative wheat–tomato farm in Puglia, a Southern Italy region. The results show that under the current crop insurance programmes, tomato production is expected to expand and will require larger amounts of fertilizer, whereas the opposite is true for wheat production. Policy and environmental implications are discussed.