Does Information Matter? Assessing the Role of Information and Prices in the Nitrogen Fertilizer Management Decision
This article investigates the impact of agronomic, environmental, and price information on the management decision of nitrogen fertilizer. Because excessive nitrogen originating from agricultural production activities can cause environmental degradation, understanding how information influences the nutrient application decision on the field is important for developing strategies for nitrogen load mitigation. I investigate the value farmers place on information about N management they receive from several sources. In particular, I evaluate how farmers use information from soil N-tests to make decisions about the rate of N to apply to the field. My results show that soil N-testing can be an effective management practices for reducing excess N applications. I find farmers who use a soil test reduce their use of commercial N by up to 14 lbs/ac relative to non-testers. I also find new evidence that rising fertilizer prices encourage farmers to manage N more carefully. I estimate a price elasticity of demand of between -0.6 and -1.29. I also show prices play a role in other forms of N management behavior, including application method and timing.
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