Abstract:  As climate risks intensify, governments increasingly subsidize insurance against weather shocks. While these subsidies improve financial protection against extreme weather events, they may reduce incentives for long-term adaptation to climate change. This paper studies the design of crop insurance subsidies on U.S. agriculture adaptation using a dynamic land use and insurance choice model. Estimation combines weather data, agricultural outcomes for the three main U.S. crops, and detailed micro-data on farmers decisions. Using climate model projections, I simulate future paths of agricultural production under counterfactual crop insurance policies. Under the current regime, funds flow to regions with growing climate risks. As a result, this policy fails to disincentivize farming in risky areas and makes the U.S. agricultural system more susceptible to future weather shocks as climate change unfolds. Targeted subsidies, which adjust generosity based on regional climate risk trends, can foster agricultural production stability by encouraging crop switching, at no additional cost to the government. However, the resulting uneven geographic distribution of subsidies may lead to political resistance from U.S. states that lose funding. Alternatively, a block-targeting approach, whereby subsidies are reallocated by risk trends within states, reduces the scope for political opposition but lowers efficiency and adaptation to climate change.