thus even if a given payment to farmers were to be designed so as to have the smallest conceivable static effects on production eg a lump sum payment without any relation to given outputs or inputs it is still likely to induce additional production because of its risk effect perhaps one of the more surprising results was that risk effects often disregarded in policy debates can be significant in quantitative terms in some cases even larger than the traditional relative price effects one implication of the analysis of risk effects is that insurance subsidies and other measures intended to reduce the variability of farm revenue or income may have strong impacts on production and trade it was also found that policies that have the effect of smoothing the variability of domestic prices relative to fluctuations of world prices may have a large impact in increasing the variability of world prices