Extreme heat costs rural Nevada farmers and taxpayers everywhere
(Nevada Current) Nevada is known for its mining industry, but during economic downturns residents in rural parts of the state rely on agriculture to fill the gap and keep afloat.
A rise in the severity and frequency of extreme weather events caused by climate change have added millions of dollars in losses to the agricultural sector in Nevada and burdened taxpayers across the country.
Higher temperatures attributed to climate change resulted in crop insurance payments for heat-related damage in Nevada totaling nearly $7 million over the last two decades, according to an analysis of federal data by the Environmental Working Group (EWG) released on Wednesday.
The analysis found that crop insurance payments for heat-related damage in the six Southwestern states — Arizona, California, Colorado, Nevada, New Mexico and Utah— totaled more than $1.3 billion during that same time.
“We wanted to focus on this region and show that climate change has already damaged agriculture in the region, and that it has already increased crop insurance program costs in many of the counties in this area,” said Anne Schechinger, the EWG report’s author. “So it’s not just a future issue. It’s something that’s already happening and happening now.”
Beyond the loss of agricultural products, insurance payments for crop failures create a financial burden on taxpayers under the nation’s biggest farm support program, the Federal Crop Insurance Program.
In the wake of the 1930s Dust Bowl, the program was created to offer farmers financial protection against losses due to extreme events. After expanding in 1980, the program started subsidizing the cost of insurance policies for farmers. In 2021, farmers paid just 37% of the total crop insurance premium; the remaining 63% was subsidized by the federal government using taxpayer dollars, according to a White House analysis.
One consequence of climate change is that insuring the country’s crops is likely to get more expensive for everyone — insurance companies, farmers and taxpayers.
“Climate change in general is making the insurance industry more risky and more expensive across the board. And crop insurance is especially vulnerable, because growing crops is just so connected to the climate,” Schechinger said. “So the crop insurance program is just super vulnerable to climate change and more extreme weather. We’re seeing these higher crop insurance costs, because climate change is having a bigger impact on growing crops.”
The program costs the federal government an average of nearly $9 billion per year. However, the U.S. Department of Agriculture estimates the cost of the crop insurance program could increase by up to 22% due to climate change-induced crop losses by the late-century — an approximate increase of $2.1 billion per year.
Nevada’s crop sector has historically supported the livestock industry by growing feed crops. Hay and alfalfa are the largest crop categories, but Nevada also produces a range of other crops.
The Nevada county with the largest heat-related crop insurance payouts was Humboldt County, which received nearly $4 million between 2001 and 2021, according to the EWG analysis.
In Humboldt, the food and agriculture sector made up about 7% of the county’s total economic output of $2.1 billion in 2020, according to the Nevada Department of Agriculture.
Insurance payments in Pershing County were the second highest in the state at nearly $3 million between 2001 and 2021. About $2 million of those payouts were awarded in the last seven years.
“It’s an interesting county because their payments have definitely increased over time. You see in those earlier years the payments are much smaller, and then in these later years, they’ve gotten quite a bit larger,” Schechinger said.
Pershing County is especially vulnerable to crop failure. About 31% of the county’s total economic output of $679 million was from the food and agriculture sector in 2020, according to the Nevada Department of Agriculture. Most of the crops in the county are soybean crops, one of the most vulnerable to decline from excessive heat and dryness during summer.
In Churchill County, not a single farmer made an insurance claim for heat-related damage from 2001 to 2015. That changed in 2016 — an especially hot and dry year in Nevada— when farmers in the county received nearly $3 million in crop insurance payments. In total, the food and agriculture sector represents about 8% of the county’s total economic output of $2.2 billion.
Lyon County in Northern Nevada received about $111,000 in heat-related crop insurance payments in 2016, the only six figure payment to the county in the last two decades. The food and agriculture sector makes up about 4% of Lyon County’s total economic output of $3.2 billion.
According to the Intergovernmental Panel on Climate Change, the average annual temperature in the Southwest went up by 1.6 degrees Fahrenheit between 1901 and 2016.
Of the 216 counties in the Southwest, 121 – 56% – experienced both hotter weather and received a crop insurance indemnity payment for heat at some point during the last two decades, according to the EWG analysis.
Schechinger argued that the Federal Crop Insurance Program needs to be reformed to align with other adaptive measures to climate change. Costs will likely continue to rise without interventions that encourage farmers to adapt to climate change and the extreme weather associated with it, she added.
“There’s quite a few things that could be done to help with this specific issue,” Schechinger said. “For one, reducing premium subsidies for high risk areas could help farmers adapt to climate change, and also make the program less expensive.”
The report was assembled using weather data from the National Oceanic and Atmospheric Administration and the Department of Agriculture.