The Subsidy For Adopting Conservation Tillage: Estimation From Observed Behavior
AbstractDue 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 for adopting conservation tillage and distinguishing between the expected payoff and the premium of adoption based on observed behavior. We find that the premium may play a significant role in farmers' adoption decisions. Even for non-adopters, conservation tillage provides a higher payoff than does conventional tillage on average, as agronomists have argued. However, non-adopters do not use conservation tillage because the expected profit gain alone does not fully compensate them for the uncertainties. To induce additional adoption, subsidies could be used. We find that in Iowa on average, the mean subsidy needed is $2.40 per acre per year for corn and $3.50 per acre per year for soybeans.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2001 Annual meeting, August 5-8, Chicago, IL with number 20542.
Date of creation: 2001
Date of revision:
Contact details of provider:
Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
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.:
- Joseph C. Cooper & Russ W. Keim, 1996.
"Incentive Payments to Encourage Farmer Adoption of Water Quality Protection Practices,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 78(1), pages 54-64.
- Cooper, Joseph C. & Keim, Russ, 1996. "Incentive payments to encourage farmer adoption of water quality protection practices," MPRA Paper 24779, University Library of Munich, Germany.
- Robert B. Barsky & Miles S. Kimball & F. Thomas Juster & Matthew D. Shapiro, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Survey," NBER Working Papers 5213, National Bureau of Economic Research, Inc.
- 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.
- Hansen, LeRoy T., 1991. "Farmer Response to Changes in Climate: The Case of Corn Production," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, issue 4.
- Robert K. Kaufmann & Seth E. Snell, 1997. "A Biophysical Model of Corn Yield: Integrating Climatic and Social Determinants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 178-190.
- 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.
- Norris, Patricia E. & Batie, Sandra S., 1987. "Virginia Farmers' Soil Conservation Decisions: An Application Of Tobit Analysis," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(01), July.
- Palsson, Anne-Marie, 1996. "Does the degree of relative risk aversion vary with household characteristics?," Journal of Economic Psychology, Elsevier, vol. 17(6), pages 771-787, December.
- Fuglie, Keith O., 1999. "Conservation Tillage And Pesticide Use In The Cornbelt," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(01), April.
- Gregory R. Pautsch & Lyubov A. Kurkalova & Bruce A. Babcock & Catherine L. Kling, 2000.
"Efficiency of Sequestering Carbon in Agricultural Soils, The,"
Center for Agricultural and Rural Development (CARD) Publications
00-wp246, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Pautsch, Gregory R. & Kurkalova, Lyubov A. & Babcock, Bruce A. & Kling, Catherine L., 2001. "Efficiency of Sequestering Carbon in Agricultural Soils (The)," Staff General Research Papers 1870, Iowa State University, Department of Economics.
- Dimara, Efthalia & Skuras, Dimitrios, 1998. "Adoption of new tobacco varieties in Greece: Impacts of empirical findings on policy design," Agricultural Economics, Blackwell, vol. 19(3), pages 297-307, December.
- Sunding, David & Zilberman, David, 2001. "The agricultural innovation process: Research and technology adoption in a changing agricultural sector," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 4, pages 207-261 Elsevier.
- Claassen, Roger & Hansen, LeRoy T. & Peters, Mark & Breneman, Vincent E. & Weinberg, Marca & Cattaneo, Andrea & Feather, Peter & Gadsby, Dwight M. & Hellerstein, Daniel & Hopkins, Jeffrey W. & Johnsto, 2001. "Agri-Environmental Policy at the Crossroads: Guideposts on a Changing Landscape," Agricultural Economics Reports 33983, United States Department of Agriculture, Economic Research Service.
- Bakshi, Gurdip S & Chen, Zhiwu, 1994. "Baby Boom, Population Aging, and Capital Markets," The Journal of Business, University of Chicago Press, vol. 67(2), pages 165-202, April.
- Barsky, Robert B, et al, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 537-79, May.
- 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.
- 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.
- Meredith J. Soule & Abebayehu Tegene & Keith D. Wiebe, 2000. "Land Tenure and the Adoption of Conservation Practices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 993-1005.
- 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.
- Jianakoplos, Nancy Ammon & Bernasek, Alexandra, 1998. "Are Women More Risk Averse?," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 620-30, October.
- Uri, Noel D., 1998. "Conservation tillage and the use of energy and other inputs in US agriculture," Energy Economics, Elsevier, vol. 20(4), pages 389-410, September.
- Allen M. Featherstone & Barry K. Goodwin, 1993. "Factors Influencing a Farmer's Decision to Invest in Long-Term Conservation Improvements," Land Economics, University of Wisconsin Press, vol. 69(1), pages 67-81.
- Moschini, GianCarlo & Hennessy, David A., 2001.
"Uncertainty, Risk Aversion, and Risk Management for Agricultural Producers,"
Staff General Research Papers
5323, Iowa State University, Department of Economics.
- Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153 Elsevier.
- Kurkalova, Lyubov A. & Kling, Catherine L. & Zhao, Jinhua, 2003. "Multiple Benefits of Carbon-Friendly Agricultural Practices: Empirical Assessment of Conservation Tillage in Iowa," Staff General Research Papers 10194, Iowa State University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.