IDEAS home Printed from https://ideas.repec.org/p/ags/aaea13/150561.html
   My bibliography  Save this paper

Paying Farmers to Reduce Nitrogen Application on Corn: The Baseline Approach

Author

Listed:
  • Horowitz, John
  • Ueda, Kohei

Abstract

We model a simulated green-payment policy to reduce nitrogen application on corn. In contrast to other papers, we recognize that the farm’s business-as-usual application rate cannot be known by the policymaker. We develop a structural model and data-driven approach to address this issue. We find that only one-third of the credits that would receive payments would be additional nitrogen reductions. The substantial volume of non-additional “reductions” leads the effective payment rate to be 3.5 times the price paid by the simulated policy. We discuss a further eligibility criterion that can improve policy performance.

Suggested Citation

  • Horowitz, John & Ueda, Kohei, 2013. "Paying Farmers to Reduce Nitrogen Application on Corn: The Baseline Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150561, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150561
    DOI: 10.22004/ag.econ.150561
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/150561/files/Corn-Nitrogen-PFP-9.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.150561?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ribaudo, Marc & Delgado, Jorge & Livingston, Michael J., 2011. "Preliminary Assessment of Nitrous Oxide Offsets in a Cap and Trade Program," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(2), pages 1-16, August.
    2. Francisco Rosas & Bruce A. Babcock & Dermot J. Hayes, 2011. "A Nonlinear Offset Program to Reduce Nitrous Oxide Emissions Induced by Excessive Nitrogen Application," Center for Agricultural and Rural Development (CARD) Publications 11-wp521, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Harrison Fell & Dallas Burtraw & Richard Morgenstern & Karen Palmer, 2012. "Climate Policy Design with Correlated Uncertainties in Offset Supply and Abatement Cost," Land Economics, University of Wisconsin Press, vol. 88(3), pages 589-611.
    4. Roger Claassen & Eric N. Duquette & David J. Smith, 2018. "Additionality in U.S. Agricultural Conservation Programs," Land Economics, University of Wisconsin Press, vol. 94(1), pages 19-35.
    5. Ruben N. Lubowski & Andrew J. Plantinga & Robert N. Stavins, 2008. "What Drives Land-Use Change in the United States? A National Analysis of Landowner Decisions," Land Economics, University of Wisconsin Press, vol. 84(4), pages 529-550.
    6. Richard D. Horan & Roger Claassen, 2007. "Targeting Green Payments under a Budget Constraint," Land Economics, University of Wisconsin Press, vol. 83(3), pages 319-330.
    7. Ribaudo, Marc & Ghosh, Gaurav S. & Shortle, James S., 2009. "Do baseline requirements hinder trades in water quality trading programs?," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49258, Agricultural and Applied Economics Association.
    8. Finger, Robert & Hediger, Werner, 2007. "The Application of Robust Regression to a Production Function Comparison – the Example of Swiss Corn," MPRA Paper 4740, University Library of Munich, Germany.
    9. Richard E. Just & Rulon D. Pope, 1979. "Production Function Estimation and Related Risk Considerations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 276-284.
    10. Mariano Mezzatesta & David A. Newburn & Richard T. Woodward, 2013. "Additionality and the Adoption of Farm Conservation Practices," Land Economics, University of Wisconsin Press, vol. 89(4), pages 722-742.
    11. Marshall, Elizabeth P. & Weinberg, Marca, 2012. "Baselines in Environmental Markets: Tradeoffs Between Cost and Additionality," Economic Brief 138922, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Claassen, Roger & Duquette, Eric & Horowitz, John & Kohei, Ueda, 2014. "Additionality in U.S. Agricultural Conservation and Regulatory Offset Programs," Economic Research Report 180414, United States Department of Agriculture, Economic Research Service.
    2. Ribaudo, Marc & Savage, Jeffrey, 2014. "Controlling non-additional credits from nutrient management in water quality trading programs through eligibility baseline stringency," Ecological Economics, Elsevier, vol. 105(C), pages 233-239.
    3. Claassen, Roger & Bowman, Maria & Breneman, Vince & Wade, Tara & Williams, Ryan & Fooks, Jacob & Hansen, LeRoy & Iovanna, Rich & Loesch, Chuck, 2017. "Conservation Compliance: How Farmer Incentives Are Changing in the Crop Insurance Era," Economic Research Report 261814, United States Department of Agriculture, Economic Research Service.
    4. Fleming, Patrick & Lichtenberg, Erik & Newburn, David, 2018. "Water Quality Trading Program Design with Heterogeneous Behavioral Responses," 2018 Annual Meeting, August 5-7, Washington, D.C. 274429, Agricultural and Applied Economics Association.
    5. Kim, Youngho & Lichtenberg, Erik & Newburn, David, 2022. "Payments and Penalties in Ecosystem Services Programs," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322103, Agricultural and Applied Economics Association.
    6. Robert Finger & Stéphanie Schmid, 2008. "Modeling agricultural production risk and the adaptation to climate change," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 68(1), pages 25-41, May.
    7. Wang, Tong & Jin, Hailong, 2024. "Impact of cost share programs on conservation practice adoption: A new perspective," 2024 Annual Meeting, July 28-30, New Orleans, LA 343974, Agricultural and Applied Economics Association.
    8. Pates, Nicholas J. & Hendricks, Nathan P., 2016. "Additionality in Payments for Environmental Service Contracts with Technology Diffusion," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236066, Agricultural and Applied Economics Association.
    9. John Horowitz, 2014. "Greenhouse Gas Offsets: Analysis Of Baseline Rules And Additionality For Reduced Nitrogen Application On Wheat," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 5(02), pages 1-27.
    10. Stephenson, Kurt & Shabman, Leonard, 2015. "Nutrient Assimilation Services for Water Quality Credit Trading Programs," RFF Working Paper Series dp-15-33, Resources for the Future.
    11. Pathak, Santosh & Wang, Hua & Adusumilli, Naveen C., 2021. "Quantifying the dynamics of agricultural conservation practices in the Delta region," 2021 Annual Meeting, August 1-3, Austin, Texas 313916, Agricultural and Applied Economics Association.
    12. Claassen, Roger & Savage, Jeff & Loesch, Chuck & Breneman, Vince & Williams, Ryan & Mulvaney, Bill & Fairbanks, Tammy, 2017. "Additionality in Grassland Easements to Provide Migratory Bird Habitat in the Northern Plains," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(3), September.
    13. Finger, Robert, 2012. "Nitrogen use and the effects of nitrogen taxation under consideration of production and price risks," Agricultural Systems, Elsevier, vol. 107(C), pages 13-20.
    14. Finger, Robert, 2011. "Reductions of Agricultural Nitrogen Use Under Consideration of Production and Price Risks," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114356, European Association of Agricultural Economists.
    15. Sawadgo, Wendiam & Plastina, Alejandro, 2021. "Do cost-share programs increase cover crop use? Empirical evidence from Iowa," ISU General Staff Papers 202101010800001084, Iowa State University, Department of Economics.
    16. Kim, Youngho & Lichtenberg, Erik & Newburn, David A., 2024. "Payments and penalties in ecosystem services programs," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    17. Salvatore Di Falco & Marcella Veronesi, 2014. "Managing Environmental Risk in Presence of Climate Change: The Role of Adaptation in the Nile Basin of Ethiopia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(4), pages 553-577, April.
    18. Lichtenberg, Erik, "undated". "Additionality of Conservation Cost Sharing," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259939, Agricultural and Applied Economics Association.
    19. Nicholas J Pates & Nathan P Hendricks, 2020. "Additionality from Payments for Environmental Services with Technology Diffusion," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 281-299, January.
    20. Finger, Robert, 2012. "Modeling the sensitivity of agricultural water use to price variability and climate change—An application to Swiss maize production," Agricultural Water Management, Elsevier, vol. 109(C), pages 135-143.

    More about this item

    Keywords

    Agricultural and Food Policy; Crop Production/Industries;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea13:150561. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.