Interaction between crop insurance and technology adoption decisions: The case of wheat farmers in Chile

This paper examines relationships between crop insurance and input technology decisions among Chilean wheat farmers. Using nationwide farm-level data, a bivariate probit model is estimated. We investigate the extent to which the adoption of production input technologies is associated with farmers’ participation in the
insurance program. We find that relationships between insurance and technology decisions are significant only for family farmers. In particular, there is a negative relationship between participation in the insurance program and the adoption of modern irrigation. Interpretations based on the role of input technologies on insurance adoption and adverse selection behaviours are discussed.