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Abstract
This paper shows that spatial panel data models can be successfully applied to an econometric
analysis of farm-scale precision agriculture data. The application focuses on the estimation of the
effect of controlled drainage water management equipment on corn yields. Using field-level
precision agriculture data and spatial panel techniques, the yield response equation is estimated
using the spatial autoregressive error random effects model with temporal heterogeneity,
incorporating spatial dependence in the error term, while controlling for the topography, weather
and the controlled drainage treatment. Controlling for random effects allows for the
disentanglement of the effects of spatial dependence from spatial heterogeneity and omitted
variables, and thus, to properly investigate the yield response. The results show that controlled
drainage has a statistically significant effect on corn yields. The effect is generally positive but
varies widely from year to year and field-to-field. For the two years of data controlled drainage
was linked to a 2.2% increase in field average yield, but that varied from a -2.6% to a +6.5%.
Evaluated at mean elevation and slope in the east part of the field, controlled drainage is
associated with 10 bu/a increase and a 0.6 bu/a decrease in yields in 2005 and 2006, respectively.
In the West part of the field, controlled drainage is associated with a 11 bu/a increase in 2006
and 2.81 bu/a decrease in 2005.