Integrating Farmer Decision Making to Target Land Retirement Programs

This study develops a model to examine the impacts of uncertainty about crop production and irreversibility of program participation on determining land rental payments and least-cost land retirement targeting in the Conservation Reserve Enhancement Program (CREP). Results show that under risk aversion only, the marginal cost of abatement and the average land rental payment are less than those under risk neutrality. However, under uncertainty and irreversibility, the marginal cost of abatement and the average land rental payment are considerably higher than those under risk neutrality or risk aversion only. It is important to incorporate uncertainty and irreversibility into the design of land rental payments and in determining participation constraints.


Issue Date:
2004-10
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/31264
Published in:
Agricultural and Resource Economics Review, Volume 33, Number 2
Page range:
233-244
Total Pages:
12




 Record created 2017-04-01, last modified 2017-08-24

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