Natural insurance as a green alternative for farmers? Empirical evidence for semi-natural habitats and methodological bias

Abstract

Natural insurance based on the provision of ecosystem services is a promising tool for the future of agriculture. However, empirical evidence of the role it can play is lacking, and its integration into standard insurance strategies – for example, the use of pesticides or market-based insurance – has been understudied. To begin to fill this gap, this study developed an original conceptual framework to estimate the insurance value provided by semi-natural habitats in a crop production context. The framework was then applied to a case study in western France, focusing on the value of natural pest control provided by grassland areas in the context of oilseed rape production. We evaluated the insurance role of grasslands for pest control and estimated this at a value of €50 per hectare. However, this estimation varied greatly according to the farmer's risk-mitigation strategies considered. We found that omitting agricultural inputs (e.g. risk-mitigating inputs such as pesticides) overestimated the insurance value of grassland areas due to the substitution effect between different types of insurance tools. Despite this variation, the findings show that it is nonetheless always optimal for farmers to maintain grassland areas to manage risk. This study provides empirical evidence of the insurance role of semi-natural habitats in an agricultural production context and offers new arguments for the ecological intensification of agriculture.