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Optimal Information Acquisition Under A Geostatistical Model

  • Pautsch, Gregory R.
  • Babcock, Bruce A.
  • Breidt, F. Jay

Studies examining the value of switching to a variable rate technology (VRT) fertilizer program assume producers possess perfect soil nitrate information. In reality, producers estimate soil nitrate levels with soil sampling. The value of switching to a VRT program depends on the quality of the estimates and on how the estimates are used. Larger samples sizes, increased spatial correlation, and decreased variability improve the estimates and increase returns. Fertilizing strictly to the estimated field map fails to account for estimation risk. Returns increase if the soil sample information is used in a Bayesian fashion to update the soil nitrate beliefs in nonsampled sites.

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File URL: http://purl.umn.edu/30797
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Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 24 (1999)
Issue (Month): 02 (December)
Pages:

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Handle: RePEc:ags:jlaare:30797
Contact details of provider: Web page: http://waeaonline.org/

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  1. Bruce A. Babcock & Gregory R. Pautsch, 1997. "Moving from Uniform to Variable Fertilizer Rates on Iowa Corn: Effects on Rates and Returns," Center for Agricultural and Rural Development (CARD) Publications 97-wp182, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Klein, Roger W, et al, 1978. "Decisions with Estimation Uncertainty," Econometrica, Econometric Society, vol. 46(6), pages 1363-87, November.
  3. Lence, Sergio H. & Hayes, Dermot J., 1994. "Empirical Minimum-Variance Hedge (The)," Staff General Research Papers 11565, Iowa State University, Department of Economics.
  4. Babcock, Bruce A., 1992. "Effects of Uncertainty on Optimal Nitrogen Applications (The)," Staff General Research Papers 10588, Iowa State University, Department of Economics.
  5. Hennessy, David A. & Babcock, Bruce A., 1998. "Information, Flexibility, and Value Added," Staff General Research Papers 1362, Iowa State University, Department of Economics.
  6. Babcock, Bruce A. & Blackmer, A. M., 1992. "Value of Reducing Temporal Input Nonuniformities (The)," Staff General Research Papers 10587, Iowa State University, Department of Economics.
  7. Swinton, Scott M. & Jones, Kezelee Q., 1998. "From Data To Information: The Value Of Sampling Vs. Sensing Soil Data," Staff Papers 11674, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  8. Babcock, Bruce A. & Carriquiry, Alicia L. & Stern, Hal S., 1996. "Evaluation of Soil Test Information in Agricultural Decision-Making," Staff General Research Papers 1139, Iowa State University, Department of Economics.
  9. Lence, Sergio H. & Hayes, Dermot J., 1995. "Land Allocation in the Presence of Estimation Risk," Staff General Research Papers 995, Iowa State University, Department of Economics.
  10. Bruce A. Babcock & Alicia L. Carriquiry & Hal S. Stern, 1996. "Evaluation of Soil Test Information in Agricultural Decision Making, An," Center for Agricultural and Rural Development (CARD) Publications 96-wp147, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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