An Analysis of the Effects of Uncertainty and Irreversibility on Farmer Participation in the Conservation Reserve Program
A real options model is developed to examine the determinants of farmer participation in the Conservation Reserve Program (CRP). This study contributes to the literature by developing a framework for ex post analysis of uncertainty and irreversibility. It extends the applications of real options models to analyze farmer participation in the CRP. The model incorporates land and owner attributes, and determines whether uncertainty and irreversibility affect the probability of participation. Option values play a significant role in farmer decisions to retire land by reducing the probability of participation. These results have implications for the design and implementation of conservation programs.
Volume (Year): 29 (2004)
Issue (Month): 02 (August)
|Contact details of provider:|| Web page: http://waeaonline.org/|
More information through EDIRC
References listed on IDEAS
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.:
- Parks P. J. & Kramer R. A., 1995. "A Policy Simulation of the Wetlands Reserve Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 223-240, March.
- Christopher D. Carroll, 1991. "Buffer stock saving and the permanent income hypothesis," Working Paper Series / Economic Activity Section 114, Board of Governors of the Federal Reserve System (U.S.).
- 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 of Agricultural Economists,
International Association of Agricultural Economists, vol. 28(3), May.
- Isik, Murat & Coble, Keith H. & Hudson, Darren & House, Lisa, 2002. "A Model Of Entry-Exit Decisions And Capacity Choice Under Demand Uncertainty," 2002 Annual meeting, July 28-31, Long Beach, CA 19797, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Joseph C. Cooper & C. Tim Osborn, 1998. "The Effect of Rental Rates on the Extension of Conservation Reserve Program Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 184-194.
- Cooper, Joseph C. & Osborn, Tim, 1998. "The effect of rental rates on the extension of Conservation Reserve Program contracts," MPRA Paper 24781, University Library of Munich, Germany.
- Capozza, Dennis & Li, Yuming, 1994. "The Intensity and Timing of Investment: The Case of Land," American Economic Review, American Economic Association, vol. 84(4), pages 889-904, September.
- 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.
- Isik, Murat & Khanna, Madhu & Winter-Nelson, Alex, 2001. "Sequential Investment In Site-Specific Crop Management Under Output Price Uncertainty," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), July.
- 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.
- Feather, Peter & Hellerstein, Daniel & Hansen, LeRoy T., 1999. "Economic Valuation of Environmental Benefits and the Targeting of Conservation Programs: The Case of the CRP," Agricultural Economics Reports 34027, United States Department of Agriculture, Economic Research Service.
- Margaret Forsyth, 2000. "On estimating the option value of preserving a wilderness area," Canadian Journal of Economics, Canadian Economics Association, vol. 33(2), pages 413-434, May.
- Stavins, Robert N & Jaffe, Adam B, 1990. "Unintended Impacts of Public Investments on Private Decisions: The Depletion of Forested Wetlands," American Economic Review, American Economic Association, vol. 80(3), pages 337-352, June. Full references (including those not matched with items on IDEAS)