Abstract:Agricultural insurance is one of the most popular and most important policies and measurements in the world.Current research has noticed that the function of agricultural insurance has surpassed the stability of farmers’ income and agricultural product supply.Participating in agricultural insurance and subsidy program can influence both the household’s resource allocation and operation behavior as well as the environmental effects.This paper first introduces the relevant theory and research method,then organizes and summarizes the literature from both home and abroad from the following three aspects:moral hazard and adverse selection,the economic impacts of agricultural insurance and subsidy on agricultural investment,investment of factors of production and production methods as well as the environmental effect of agricultural production behavior.Consequently,this paper proposes two ways on the influence of agricultural insurance on household’s production decision-making:input-output impact and environmental effects.This paper finally puts forward four paths on how to further deepen the research.