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Green Subsidies in Agriculture: Estimating the Adoption Costs of Conservation Tillage from Observed Behavior (Revised)

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  • Lyubov A. Kurkalova
  • Catherine L. Kling
  • Jinhua Zhao

Abstract

Because of payoff uncertainties combined with risk aversion and/or real options, farmers may demand a premium in order to adopt conservation tillage practices, over and above the compensation for the expected profit losses (if any). We propose a method of directly estimating the financial incentives for adopting conservation tillage and distinguishing between the expected payoff and premium of adoption based on observed behavior. We find that the premium may play a significant role in farmers' adoption decisions.

Suggested Citation

  • Lyubov A. Kurkalova & Catherine L. Kling & Jinhua Zhao, 2003. "Green Subsidies in Agriculture: Estimating the Adoption Costs of Conservation Tillage from Observed Behavior (Revised)," Center for Agricultural and Rural Development (CARD) Publications 01-wp286, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:01-wp286
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    References listed on IDEAS

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    1. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-719, November.
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    Cited by:

    1. Nobuhiko Fuwa & Asa Jose U. Sajise, 2009. "Exploring Environmental Services Incentive Policies for the Philippines Rice Sector: The Case of Intra-Species Agrobiodiversity Conservation," Natural Resource Management and Policy, in: Leslie Lipper & Takumi Sakuyama & Randy Stringer & David Zilberman (ed.), Payment for Environmental Services in Agricultural Landscapes, chapter 10, pages 221-238, Springer.
    2. Zhao, Jinhua & Kurkalova, Lyubov A. & Kling, Catherine L., 2004. "Alternative Green Payment Policies When Multiple Benefits Matter," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(1), pages 1-11, April.
    3. Secchi, Silvia & Feng, Hongli & Kurkalova, Lyubov A. & Kling, Catherine L. & Gassman, Philip W. & Jha, Manoj, 2005. "Nonpoint Source Needs Assessment for Iowa Part II: the Cost of Improving Iowa’s Water Quality," ISU General Staff Papers 200501010800001068, Iowa State University, Department of Economics.
    4. Wade, Tara & Kurkalova, Lyubov A. & Secchi, Silvia, 2012. "Using the logit model with aggregated choice data in estimation of Iowa corn farmers’ conservation tillage subsidies," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124974, Agricultural and Applied Economics Association.
    5. Kim, Man-Keun & McCarl, Bruce A. & Murray, Brian C., 2008. "Permanence discounting for land-based carbon sequestration," Ecological Economics, Elsevier, vol. 64(4), pages 763-769, February.
    6. Kurkalova, Lyubov A. & Rabotyagov, Sergey S., 2006. "Estimation of a binary choice model with grouped choice data," Economics Letters, Elsevier, vol. 90(2), pages 170-175, February.

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