@article{Kuminoff:19531,
      recid = {19531},
      author = {Kuminoff, Nicolai V. and Wossink, Ada},
      title = {Valuing the Option to Convert from Conventional to Organic  Farming},
      address = {2005},
      number = {378-2016-21136},
      series = {Selected Paper 135622},
      pages = {21},
      year = {2005},
      abstract = {Based on option value theory, we develop a theoretical  model to assess the dollar compensation required for the  conversion to organic farming.  Our empirical model is a  switching regression model with two regimes and we use  county level data on organic and conventional corn and  soybean production in the U.S. for the application.   Assuming an interest rate of 10 percent, a conventional  corn-soybean grower would need to receive a one-time  payment of $315 per acre to compensate for the conversion  cost and an additional $1,088 per acre to conver the long  run higher production and market risks.  The sum of these  two values equals an annual payment of $228 per acre for a  10 year contract.  The results are discussed in the context  of the recently introduced Conservation Security Program,  which wil make direct payments to US farmers for organic  practices.},
      url = {http://ageconsearch.umn.edu/record/19531},
      doi = {https://doi.org/10.22004/ag.econ.19531},
}