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Does Information Matter? Assessing the Role of Information and Prices in the Nitrogen Fertilizer Management Decision

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  • Williamson, James M.
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    Abstract

    This article investigates the impact of agronomic, environmental, and price information on the management decision of nitrogen fertilizer. Because excessive nitrogen originating from agricultural production activities can cause environmental degradation, understanding how information influences the nutrient application decision on the field is important for developing strategies for nitrogen load mitigation. I investigate the value farmers place on information about N management they receive from several sources. In particular, I evaluate how farmers use information from soil N-tests to make decisions about the rate of N to apply to the field. My results show that soil N-testing can be an effective management practices for reducing excess N applications. I find farmers who use a soil test reduce their use of commercial N by up to 14 lbs/ac relative to non-testers. I also find new evidence that rising fertilizer prices encourage farmers to manage N more carefully. I estimate a price elasticity of demand of between -0.6 and -1.29. I also show prices play a role in other forms of N management behavior, including application method and timing.

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    File URL: http://purl.umn.edu/60892
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    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 60892.

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    Date of creation: 2010
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    Handle: RePEc:ags:aaea10:60892

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    Related research

    Keywords: Nitrogen Fertilizer Application; Soil N-testing; Agronomic Information; Best Management Practices; Nonpoint Source Pollution; Demand and Price Analysis; Environmental Economics and Policy; Q24; Q28;

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    1. Chad Lawley & Erik Lichtenberg & Doug Parker, 2009. "Biases in Nutrient Management Planning," Land Economics, University of Wisconsin Press, vol. 85(1), pages 186-200.
    2. Fullerton, Don & Metcalf, Gilbert E., 2002. "Tax incidence," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 26, pages 1787-1872 Elsevier.
    3. Hansen, Lars Gårn, 2004. "Nitrogen Fertilizer Demand from Danish Crop Farms - Regulatory Implications of Farm Heterogeneity," MPRA Paper 48366, University Library of Munich, Germany.
    4. Jutta Roosen & David A. Hennessy, 2003. "Tests for the Role of Risk Aversion on Input Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 30-43.
    5. Predrag Rajsic & Alfons Weersink & Markus Gandorfer, 2009. "Risk and Nitrogen Application Levels," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(2), pages 223-239, 06.
    6. Satya Yadav & Willis Peterson & K. Easter, 1997. "Do farmers overuse nitrogen fertilizer to the detriment of the environment?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 9(3), pages 323-340, April.
    7. JunJie Wu & Bruce A. Babcock, 1998. "The Choice of Tillage, Rotation, and Soil Testing Practices: Economic and Environmental Implications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 494-511.
    8. Bruce A. Babcock, 2011. "The Impact of Ethanol and Ethanol Subsidies on Corn Prices: Revisiting History," Food and Agricultural Policy Research Institute (FAPRI) Publications 11-pb5, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
    9. Glenn Sheriff, 2005. "Efficient Waste? Why Farmers Over-Apply Nutrients and the Implications for Policy Design," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(4), pages 542-557.
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