Analyzing the Relationship between Agricultural AI Adoption and Government-Subsidized Insurance

Due to the increased unpredictability and severity of weather patterns caused by climate change, traditional farming practices and risk management strategies are becoming increasingly inadequate. In this paper, we explore the literature to understand the potential of artificial intelligence (AI) in mitigating climate-related agricultural risks and the pivotal role that public institutions play in encouraging farmers to adopt such technologies. We propose a framework to integrate AI into government-subsidized insurance structures, focusing on reduced premiums through government intervention. We argue that AI’s potential to reduce the uncertainty and severity of climate-induced damages could lower the overall risk profile of insured farmers, thereby justifying lower premiums in the long run. We further discuss the implications of such policies on insurance markets, agricultural sustainability, and global food security. Our initial exploration contributes to the literature by addressing a relatively underexplored intersection of two critical fields—agricultural insurance and artificial intelligence—suggesting directions for future research.