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

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  • Isik, Murat
  • Khanna, Madhu

Abstract

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.

Suggested Citation

  • Isik, Murat & Khanna, Madhu, 2002. "Variable-Rate Nitrogen Application Under Uncertainty: Implications For Profitability And Nitrogen Use," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(1), pages 1-16, July.
    • Handle: RePEc:ags:jlaare:31087
    DOI: 10.22004/ag.econ.31087
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    References listed on IDEAS

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    Cited by:

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    2. Madhu Khanna, 2021. "Digital Transformation of the Agricultural Sector: Pathways, Drivers and Policy Implications," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1221-1242, December.
    3. Isik, Murat & Coble, Keith H. & Hudson, Darren & House, Lisa O., 2003. "A model of entry-exit decisions and capacity choice under demand uncertainty," Agricultural Economics, Blackwell, vol. 28(3), pages 215-224, May.
    4. Finger, R. & Gerwig, C.N., 2008. "The Impact of Climate Change on the Profitability of Site Specific Technologies," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 43, March.
    5. Charles Moss & Troy Schmitz, 2006. "A semiparametric estimator of the Zellner production function for corn: fitting the univariate primal," Applied Economics Letters, Taylor & Francis Journals, vol. 13(13), pages 863-867.
    6. Wang, Tong & Jin, Hailong & Sieverding, Heidi & Kumar, Sandeep & Miao, Yuxin & Rao, Xudong & Obembe, Oladipo & Mirzakhani Nafchi, Ali & Redfearn, Daren & Cheye, Stephen, 2023. "Understanding farmer views of precision agriculture profitability in the U.S. Midwest," Ecological Economics, Elsevier, vol. 213(C).
    7. Murat Isik, 2004. "Incentives for Technology Adoption Under Environmental Policy Uncertainty: Implications for Green Payment Programs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(3), pages 247-263, March.
    8. McFadden, Jonathan & Njuki, Eric & Griffin, Terry, 2023. "Precision Agriculture in the Digital Era: Recent Adoption on U.S. Farms," USDA Miscellaneous 333550, United States Department of Agriculture.
    9. Wang, Tong & Jin, Hailong & Sieverding, Heidi L. & Rao, Xudong & Miao, Yuxin & Kumar, Sandeep & Redfearn, Daren & Nafchi, Ali, 2022. "Understanding farmer perceptions of precision agriculture profitability in the U.S. Midwest," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322502, Agricultural and Applied Economics Association.
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