IDEAS home Printed from https://ideas.repec.org/a/ags/joaaec/43460.html
   My bibliography  Save this article

Nutrient Best Management Practice Insurance and Farmer Perceptions of Adoption Risk

Author

Listed:
  • Mitchell, Paul D.

Abstract

This paper explores the effect farmer perceptions concerning how best management practice (BMP) adoption changes the profit distribution have on BMP adoption incentives and the potential for insurance to increase these incentives. Adoption indifference curves illustrate the effect of farmer perceptions on BMP adoption incentives and the potential for insurance to expand the set of perceptions consistent with adoption. Empirical analysis quantifies these conceptual results for nutrient BMP insurance, a new policy available to corn farmers as part of a USDA-Risk Management Agency pilot program in four states. Results indicate that nutrient BMP insurance can have economically relevant effects on farmer adoption incentives.

Suggested Citation

  • Mitchell, Paul D., 2004. "Nutrient Best Management Practice Insurance and Farmer Perceptions of Adoption Risk," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(3), pages 1-17, December.
    • Handle: RePEc:ags:joaaec:43460
    DOI: 10.22004/ag.econ.43460
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/43460/files/Mitchell%20JAAE%20December%202004.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.43460?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David A. Hennessy & Bruce A. Babcock & Dermot J. Hayes, 1997. "Budgetary and Producer Welfare Effects of Revenue Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1024-1034.
    2. Babcock, Bruce A. & Choi, E. Kwan & Feinerman, Eli, 1993. "Risk And Probability Premiums For Cara Utility Functions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), pages 1-8, July.
    3. Bruce A. Babcock & Chad E. Hart & Dermot J. Hayes, 2004. "Actuarial Fairness of Crop Insurance Rates with Constant Rate Relativities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 563-575.
    4. Huang, Wen-Yuan, 2002. "Using Insurance to Enhance Nitrogen Fertilizer Application Timing to Reduce Nitrogen Losses," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 34(1), pages 131-148, April.
    5. Coble, Keith H. & Heifner, Richard G. & Zuniga, Manuel, 2000. "Implications Of Crop Yield And Revenue Insurance For Producer Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-21, December.
    6. Fraser, R. W. & Lekakis, J. N., 2003. "Risk Management and the Environment: Agriculture in Perspective," Staff General Research Papers Archive 10594, Iowa State University, Department of Economics.
    7. Babcock, Bruce A. & Blackmer, Alfred M., 1992. "The Value Of Reducing Temporal Input Nonuniformities," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(2), pages 1-13, December.
    8. Quirino Paris, 1992. "The von Liebig Hypothesis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 1019-1028.
    9. George C. Davis & Maria Cristina Espinoza, 1998. "A Unified Approach to Sensitivity Analysis in Equilibrium Displacement Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 868-879.
    10. S. SriRamaratnam & David A. Bessler & M. Edward Rister & John E. Matocha & James Novak, 1987. "Fertilization under Uncertainty: An Analysis Based on Producer Yield Expectations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 349-357.
    11. Feather, Peter & Cooper, Joseph C., 1995. "Voluntary Incentives for Reducing Agricultural Nonpoint Source Water Pollution," Agricultural Information Bulletins 33619, United States Department of Agriculture, Economic Research Service.
    12. Quirino Paris & Keith Knapp, 1989. "Estimation of von Liebig Response Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 178-186.
    13. Mitchell, Paul D. & Hennessy, David A., 2003. "Factors Determining Best Management Practice Adoption Incentives and the Impact of Green Insurance," Staff General Research Papers Archive 10418, Iowa State University, Department of Economics.
    14. Huang, Wen-Yuan, 2002. "Using Insurance To Enhance Nitrogen Fertilizer Application Timing To Reduce Nitrogen Losses," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(01), pages 1-18, April.
    15. Hrubovcak, James & Vasavada, Utpal & Aldy, Joseph E., 1999. "Green Technologies for a More Sustainable Agriculture," Agricultural Information Bulletins 33721, United States Department of Agriculture, Economic Research Service.
    16. Meyer, Jack, 1987. "Two-moment Decision Models and Expected Utility Maximization," American Economic Review, American Economic Association, vol. 77(3), pages 421-430, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meilin Ma & Carson Reeling & Megan N Hughes & Shalamar Armstrong & Richard Roth, 2023. "Comparison of conservation instruments under long-run yield uncertainty and farmer risk aversion," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(5), pages 1685-1714.
    2. Chai, Yuan & J. Pannell, David & G. Pardey, Philip, 2023. "Nudging farmers to reduce water pollution from nitrogen fertilizer," Food Policy, Elsevier, vol. 120(C).
    3. Xiaodong Du & David A. Hennessy & Cindy L. Yu, 2012. "Testing Day's Conjecture that More Nitrogen Decreases Crop Yield Skewness," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 225-237.
    4. Harris, Leah M. & Swinton, Scott M. & Shupp, Robert S., 2014. "Experimental auctions to evaluate incentives for cost-effective agricultural phosphorus abatement in the Great Lakes," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170287, Agricultural and Applied Economics Association.
    5. Traxler, Emilia & Li, Tongzhe, 2020. "Agricultural Best Management Practices, A summary of adoption behaviour," Working Papers 305271, University of Guelph, Institute for the Advanced Study of Food and Agricultural Policy.
    6. Tipparat Pongthanapanich & Eva Roth, 2006. "Toward Environmental Responsibility of Thai Shrimp Farming through a Voluntary Management Scheme," Working Papers 70/06, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.

    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. Lichtenberg, Erik, 2002. "Agriculture and the environment," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 23, pages 1249-1313, Elsevier.
    2. Paulson, Nicholas D. & Babcock, Bruce A., 2010. "Readdressing the Fertilizer Problem," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), pages 1-17, December.
    3. Mitchell, Paul D. & Knight, Thomas O., 2008. "Economic Analysis of Supplemental Deductible Coverage as Recommended in the USDA's 2007 Farm Bill Proposal," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(1), pages 1-15, April.
    4. Marianne Lefebvre & Estelle Midler & Philippe Bontems, 2020. "Adoption of Environment-Friendly Agricultural Practices with Background Risk: Experimental Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(2), pages 405-428, July.
    5. Babcock, Bruce A. & Shogren, Jason F., 1995. "The cost of agricultural production risk," Agricultural Economics, Blackwell, vol. 12(2), pages 141-150, August.
    6. Lefebvre, Marianne & Midler, Estelle & Bontems, Philippe, 2020. "Adoption of environmentally-friendly agricultural practices with background risk: experimental evidence," TSE Working Papers 20-1079, Toulouse School of Economics (TSE).
    7. Glenn Sheriff, 2005. "Efficient Waste? Why Farmers Over-Apply Nutrients and the Implications for Policy Design," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(4), pages 542-557.
    8. Mitchell, Paul D. & Zhu, En (John), 2003. "Moral Hazard And Bt Corn Refuge," 2003 Annual meeting, July 27-30, Montreal, Canada 22113, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Chai, Yuan & J. Pannell, David & G. Pardey, Philip, 2023. "Nudging farmers to reduce water pollution from nitrogen fertilizer," Food Policy, Elsevier, vol. 120(C).
    10. Mitchell, Paul D. & Knight, Thomas O., 2007. "Economic Analysis of Supplemental Deductible Coverage as Recommended in the USDA’s 2007 Farm Bill Proposal," Staff Papers 92125, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    11. Yang, Juan & Mitchell, Paul D. & Gray, Michael & Steffey, Kevin, 2007. "Unbalanced Nested Component Error Model and the Value of Soil Insecticide and Bt Corn for Controlling Western Corn Rootworm," Staff Paper Series 510, University of Wisconsin, Agricultural and Applied Economics.
    12. Meilin Ma & Carson Reeling & Megan N Hughes & Shalamar Armstrong & Richard Roth, 2023. "Comparison of conservation instruments under long-run yield uncertainty and farmer risk aversion," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(5), pages 1685-1714.
    13. Barry, Peter J. & Escalante, Cesar L. & Moss, Leeann E., 2002. "Rental Premiums For Share Versus Cash Leases," 2002 Annual meeting, July 28-31, Long Beach, CA 19684, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Asci, Serhat & Borisova, Tatiana & VanSickle, John J., 2015. "Role of economics in developing fertilizer best management practices," Agricultural Water Management, Elsevier, vol. 152(C), pages 251-261.
    15. Yang, Juan & Mitchell, Paul D. & Gray, Michael E. & Steffey, Kevin L., 2007. "Unbalanced Nested Component Error Model and the Value of Soil Insecticide and Bt Corn for Controlling Western Corn Rootworm," Staff Papers 92127, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    16. Rosas, Juan Francisco, 2012. "Essays on the environmental effects of agricultural production," ISU General Staff Papers 201201010800003744, Iowa State University, Department of Economics.
    17. Ashok Mishra & Barry Goodwin, 2006. "Revenue insurance purchase decisions of farmers," Applied Economics, Taylor & Francis Journals, vol. 38(2), pages 149-159.
    18. María Bielza & Alberto Garrido & José M. Sumpsi, 2004. "Revenue insurance as an income stabilization policy: an application to the Spanish olive oil sector," Post-Print hal-01201063, HAL.
    19. Nyambane, Gerald G. & Hanson, Steven D. & Myers, Robert J. & Black, J. Roy, 2002. "Dynamic Risk Management Under Credit Constraints," 2002 Conference, April 22-23, 2002, St. Louis, Missouri 19072, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    20. Makus, Larry D. & Wang, H. Holly & Chen, Xiaomei, 2003. "Evaluating Risk Management Strategies For Non-Irrigated Small Grain Producers," 2003 Annual meeting, July 27-30, Montreal, Canada 22257, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices

    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:joaaec:43460. 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/saeaaea.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.