While this major policy shift has had significant ramifications for the economy and society, the rural economy did not collapse as a result of the withdrawal of these subsidies. After a few years the agriculture sector adapted to the changed political reality, and farm operations are now less vulnerable to climatic variations and extremes. Farmers accept the lower yields in order to benefit from the greater resilience to variations in climatic conditions. Premiums generally reflect the frequency of hazards and the exposure of farm operations. Not all farmers choose to buy insurance, but many do, resulting in a major expansion in insurance and a highly competitive agricultural insurance sector.
Farmers consciously estimate the likelihood of drought, hail, storms, etc.
Insurance companies also seek data on climatic variability to aid in their estimation of risks and premiums. The case of agriculture shows that government subsidies which effectively absorb climate-related risks tend to discourage adaptation to climatic variations and extremes. Even events which recur with considerable frequency are not factored into farmers' decisions if farmers know the risks are covered in other ways, such as by government compensation. Regardless of the arguments for and against these types of government subsidies, Canada will likely be forced to evaluate such programs because of fiscal pressures. It is occurring already.