Incentives to Supply Enhanced Ecosystem Services from Cropland

This paper examines the willingness of farmers to participate in hypothetical programs that would pay them to adopt cropping practices that enhance provision of ecosystem services from agriculture. A survey of 3,000 Michigan corn and soybean farmers elicited willingness to adopt four sets of cropping practices that reflected increasing levels of environmental stewardship. Acreage enrollments in the programs were modeled using hurdle models. The acreage that farmers would be willing to enroll depends chiefly on farm size and the perception of environmental improvements from the practices. For farms over 500 acres, the payment offered was also a significant inducement to acreage enrollment in all systems examined. This paper advances the literature on adoption of agro-environmental practices by developing a supply function for crop acreage managed for environmental stewardship. Like prior studies of environmental technology adoption in agriculture, we find that environmental attitudes and affiliations, age, education and current farming practices are influential. But we find that the low cost suppliers of environmental services are the largest farms. Agricultural policies based on payment for environmental services that aim for cost-effective environmental impact will likely achieve most of their impact from larger farms.