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Green Subsidies in Agriculture: Estimating the Adoption Costs of Conservation Tillage from Observed Behavior

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Author Info
Lyubov Kurkalova
Catherine Kling
Jinhua Zhao

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Abstract

"Due to payoff uncertainties combined with risk aversion and/or real options, farmers may demand a premium in order to adopt conservation tillage practices, over and above the compensation for the expected profit losses (if any). We propose a method of directly estimating the financial incentives required for adopting conservation tillage and distinguishing between the expected payoff and premium of adoption based on the observed behavior. We find that the premium may play a significant role in farmers' adoption decisions. In an application to the state of Iowa, we find that if a uniform conservation tillage adoption subsidy program were offered in 1992, over 86% of the subsidy program payments would be an income transfer to existing and low-cost adopters." Copyright 2006 Canadian Agricultural Economics Society.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1744-7976.2006.00048.x
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Publisher Info
Article provided by Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie in its journal Canadian Journal of Agricultural Economics Revue canadienne d'agroeconomie.

Volume (Year): 54 (2006)
Issue (Month): 2 (06)
Pages: 247-267
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Handle: RePEc:bla:canjag:v:54:y:2006:i:2:p:247-267

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-19, November. [Downloadable!] (restricted)
  2. GR Pautsch & LA Kurkalova & BA Babcock & CL Kling, 2001. "The Efficiency Of Sequestering Carbon In Agricultural Soils," Contemporary Economic Policy, Western Economic Association International, vol. 19(2), pages 123-134, 04. [Downloadable!] (restricted)
  3. Paul D. Mitchell, 1997. "Cost of Production System Budgets," Center for Agricultural and Rural Development (CARD) Publications 97-tr37, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
  4. Moschini, GianCarlo & Hennessy, David A., 2002. "Uncertainty, Risk Aversion, and Risk Management for Agricultural Producers," Staff General Research Papers 5323, Iowa State University, Department of Economics.
    Other versions:
  5. Arrow, Kenneth J & Fisher, Anthony C, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 312-19, May. [Downloadable!] (restricted)
  6. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September. [Downloadable!] (restricted)
  7. Pautsch, Gregory R. & Kurkalova, Lyubov A. & Babcock, Bruce A. & Kling, Catherine L., 2000. "Efficiency of Sequestering Carbon in Agricultural Soils (The)," Staff General Research Papers 1870, Iowa State University, Department of Economics. [Downloadable!]
    Other versions:
  8. Cooper, Joseph C., 1997. "Combining Actual And Contingent Behavior Data To Model Farmer Adoption Of Water Quality Protection Practices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(01), July. [Downloadable!]
  9. Fox, Glenn & Weersink, Alfons & Sarwar, Ghulam & Duff, Scott & Deen, Bill, 1991. "Comparative Economics Of Alternative Agricultural Production Systems: A Review," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 20(1), April. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Banerjee, Swagata Ban & Martin, Steven W. & Roberts, Roland K. & Larson, James A. & Hogan, Robert, Jr. & Johnson, Jason L. & Paxton, Kenneth W. & Reeves, Jeanne M., 2007. "Adoption of Conservation-Tillage Practices in Cotton Production," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34842, Southern Agricultural Economics Association. [Downloadable!]
  2. Kuminoff, Nicolai V. & Wossink, Ada, 2005. "Valuing the Option to Convert from Conventional to Organic Farming," 2005 Annual meeting, July 24-27, Providence, RI 19531, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  3. Kurkalova, Lyubov, 2006. "Empirical Assessment of Baseline Conservation Tillage Adoption Rates and Soil Carbon Sequestration in the Upper Mississippi River Basin," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25457, International Association of Agricultural Economists. [Downloadable!]
  4. Kurkalova, Lyubov & Secchi, Silvia & Kling, Catherine, 2004. "Targeting And The Economics Of Cumulative Watershed Effects," 2004 Annual meeting, August 1-4, Denver, CO 20390, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  5. Kurkalova, Lyubov & Rabotyagov, Sergey, 2005. "Estimation of a Binary Choice Model with Grouped Choice Data," Staff General Research Papers 12234, Iowa State University, Department of Economics. [Downloadable!]
  6. Lyubov A. Kurkalova & Catherine L. Kling & Jinhua Zhao, 2003. "Institutions and the Value of Nonpoint Source Measurement Technology: Carbon Sequestration in Agricultural Soils," Center for Agricultural and Rural Development (CARD) Publications 03-wp338, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
  7. Sengupta, Sanchita & Kurkalova, Lyubov & Kling, Catherine, 2006. "Avoiding biases from data-dependent specification search: an application to a tillage choice model," 2006 Annual meeting, July 23-26, Long Beach, CA 21399, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  8. FOUDI Sebastien, 2006. "Agriculture and Resource Exploitation: A Dynamic Bioeconomic Model of Agricultural Effort and Land Use Determination," Working Papers 06.25.218, LERNA, University of Toulouse. [Downloadable!]
  9. Wossink, Ada & Kuminoff, Nicolai V., 2005. "Valuing the Option to Switch to Organic Farming: An Application to U.S. Corn and Soybeans," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24716, European Association of Agricultural Economists. [Downloadable!]
  10. Lyubov A. Kurkalova & Sergey Rabotyagov, 2005. "Estimation of a Binary Choice Model with Grouped Choice Data," Center for Agricultural and Rural Development (CARD) Publications 05-wp381, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
  11. Tanaka, Katsuya & Wu, Junjie, 2004. "Evaluation Of Conservation Policies For Reducing Nitrogen Loads To The Mississippi River And Gulf Of Mexico," 2004 Annual meeting, August 1-4, Denver, CO 20135, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  12. Maung, Thein A. & McCarl, Bruce A., 2008. "Economics of Biomass Fuels for Electricity Production: A Case Study with Crop Residues," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6417, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  13. Zhao, Jinhua & Kling, Catherine L. & Kurkalova, Lyubov, 2003. "Alternative Green Payment Policies under Heterogeneity When Multiple Benefits Matter," Staff General Research Papers 10682, Iowa State University, Department of Economics. [Downloadable!]
    Other versions:
  14. Diane P. Dupont, 2009. "Cost-sharing Incentive Programs for Source Water Protection: The Grand River’s Rural Water Quality Program," Working Papers 0905, Brock University, Department of Economics, revised Jun 2009. [Downloadable!]
  15. Lyubov A. Kurkalova & Catherine L Kling & Jinhua Zhao, 2004. "Value of agricultural non-point source pollution measurement technology: assessment from a policy perspective," Applied Economics, Taylor and Francis Journals, vol. 36(20), pages 2287-2298, November. [Downloadable!] (restricted)
    Other versions:
  16. Kurkalova, Lyubov & Kling, Catherine, 2006. "Empirical Assessment of Baseline Conservation Tillage Adoption Rates and Soil Carbon Sequestration in the Upper Mississippi River Basin," 2006 Annual meeting, July 23-26, Long Beach, CA 21169, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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