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Variable-Rate Nitrogen Application Under Uncertainty: Implications For Profitability And Nitrogen Use

  • Isik, Murat
  • Khanna, Madhu

A micro-level model of farmer decision making is developed to examine the extent to which uncertainty about potential yields influences the value of site-specific technologies. The economic and environmental benefits of these technologies arise from two sources: information gathering and variable-rate nitrogen application is higher on fields with low average potential yields, high spatial variability, positively skewed potential yield distributions, responsive yield to nitrogen, and low uncertainty. Variable-rate application decreases nitrogen use by reducing the extent of overapplication. However, in the presence of uncertainty about potential yields, the incentives to overapply nitrogen irrespective of the method of application, uniform of variable rate, can reduce the economic and environmental benefits of site-specific technologies.

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File URL: http://purl.umn.edu/31087
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Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 27 (2002)
Issue (Month): 01 (July)
Pages:

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Handle: RePEc:ags:jlaare:31087
Contact details of provider: Web page: http://waeaonline.org/

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  1. Pautsch, Gregory R. & Babcock, Bruce A. & Breidt, F. J., 1999. "Optimal Information Acquisition Under a Geostatistical Model," Staff General Research Papers 1517, Iowa State University, Department of Economics.
  2. Gary Kachanoski, 1999. "Economic Feasibility of Variable-Rate Technology for Nitrogen on Corn," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 914-927.
  3. Babcock, Bruce A., 1992. "Effects of Uncertainty on Optimal Nitrogen Applications (The)," Staff General Research Papers 10588, Iowa State University, Department of Economics.
  4. Babcock, Bruce A. & Pautsch, Gregory R., 1998. "Moving from Uniform to Variable Fertilizer Rates on Iowa Corn: Effects on Rates and Returns," Staff General Research Papers 1121, Iowa State University, Department of Economics.
  5. English, Burton C. & Mahajanashetti, S.B. & Roberts, Roland K., 1999. "Economic And Environmental Benefits Of Variable Rate Application Of Nitrogen To Corn Fields: Role Of Variability And Weather," 1999 Annual meeting, August 8-11, Nashville, TN 21533, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Ribaudo, Marc & Horan, Richard D. & Smith, Mark E., 1999. "Economics of Water Quality Protection from Nonpoint Sources: Theory and Practice," Agricultural Economics Reports 33913, United States Department of Agriculture, Economic Research Service.
  7. Khanna, Madhu & Isik, Murat & Winter-Nelson, Alex, 2000. "Investment in site-specific crop management under uncertainty: implications for nitrogen pollution control and environmental policy," Agricultural Economics, Blackwell, vol. 24(1), pages 9-21, December.
  8. Babcock, Bruce A. & Shogren, Jason F., 1995. "The cost of agricultural production risk," Agricultural Economics, Blackwell, vol. 12(2), pages 141-150, August.
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