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Integrating Farmer Decision Making to Target Land Retirement Programs

Published online by Cambridge University Press:  15 September 2016

Wanhong Yang  and
Murat Isik
Wanhong Yang
Affiliation:
Department of Geography, University of Guelph, Guelph, Ontario, Canada
Murat Isik
Affiliation:
Department of Agricultural Economics and Rural Sociology, University of Idaho, Moscow, Idaho
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Abstract

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.

Keywords

Conservation Reserve Enhancement Programirreversible decisionland retirementrental paymentstargetinguncertainty
Type
Articles
Information
Agricultural and Resource Economics Review , Volume 33 , Issue 2 , October 2004 , pp. 233 - 244
Copyright
Copyright © 2004 Northeastern Agricultural and Resource Economics Association 

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