Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-25T17:07:15.350Z Has data issue: false hasContentIssue false
  • English
  • Français

Nutrient Best Management Practice Insurance and Farmer Perceptions of Adoption Risk

Published online by Cambridge University Press:  28 April 2015

Paul D. Mitchell
Paul D. Mitchell*
Affiliation:
Department of Agricultural Economics, Texas A&M University, College Station, TX. He currently is assistant professor, Department of Agricultural and Applied Economics, University of Wisconsin, Madison, WI
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper explores the effect farmer perceptions concerning how best management practice (BMP) adoption changes the profit distribution have on BMP adoption incentives and the potential for insurance to increase these incentives. Adoption indifference curves illustrate the effect of farmer perceptions on BMP adoption incentives and the potential for insurance to expand the set of perceptions consistent with adoption. Empirical analysis quantifies these conceptual results for nutrient BMP insurance, a new policy available to corn farmers as part of a USDA-Risk Management Agency pilot program in four states. Results indicate that nutrient BMP insurance can have economically relevant effects on farmer adoption incentives.

Keywords

adoption indifference curvescrop insurancefertilizergreen insuranceD8Q12Q16Q21
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 36 , Issue 3 , December 2004 , pp. 657 - 673
Copyright
Copyright © Southern Agricultural Economics Association 2004

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Babcock, B.A., and Blackmer, A.M.. “The Value of Reducing Temporal Input Nonuniformi ties.” Journal of Agricultural and Resource Economics 17(December 1992):335–47.Google Scholar
Babcock, B.A., Choi, E.K., and Feinerman, E.. “Risk and Probability Premiums for CARA Utility Functions.” Journal of Agricultural and Resource Economics 18(July 1993):17–24.Google Scholar
Babcock, B.A., Hart, C.E., and Hayes, D.J.. “Actuarial Fairness of Crop Insurance Rates with Constant Rate Relativities.” American Journal of Agricultural Economics 86(August 2004):563–75.CrossRefGoogle Scholar
Binford, G.D., Blackmer, A.M., and Cerrato, M.E.. “Relationship between Corn Yields and Soil Nitrate in Late Spring.” Agronomy Journal 84(1992):53–59.CrossRefGoogle Scholar
Blackmer, A.M., Pottker, D., Cerrato, M.E., and Webb, J.. “Correlations between Soil Nitrogen Concentrations in Late Spring and Corn Yields in Iowa.” Journal of Production Agriculture 2(1989):103–9.CrossRefGoogle Scholar
Brown, H.M. “Evaluation of Nitrogen Availability Indices.” Ph.D. dissertation. University of Illinois, Urbana-Champaign, 1996.Google Scholar
Buman, S. Personal communication. Agren, Inc., Carroll, IA, March 2004.Google Scholar
Cerrato, M.E., and Blackmer, A.M.. “Comparison of Models for Describing Corn Yield Response to Nitrogen Fertilizer.” Agronomy Journal 82(1990):138–43.CrossRefGoogle Scholar
Coble, K.H., Heifner, R.G., and Zuniga, M.. “Implications of Crop Yield and Revenue Insurance for Producer Hedging.” Journal of Agricultural and Resource Economics 25(December 2000):432–52.Google Scholar
Davis, G.C., and Espinoza, M.C.. “A Unified Approach to Sensitivity Analysis in Equilibrium Displacement Models.” American Journal of Agricultural Economics 80(November 1998):868–79.CrossRefGoogle Scholar
Evans, M., Hastings, N., and Peacock, B.. Statistical Distributions, 2nd ed. New York: John Wiley & Sons, 1993.Google Scholar
Feather, P., and Cooper, J.. Voluntary Incentives for Reducing Agricultural Nonpoint Source Water Pollution. Washington, DC: U.S. Department of Agriculture/Economic Research Service, Agricultural Information Bulletin No. 716, 1995.Google Scholar
Frank, M.D., Beattie, B.R., and Embleton, M.E.. “A Comparison of Alternative Crop Response Models.” American Journal of Agricultural Economics 72(August 1990):597–603.CrossRefGoogle Scholar
Goodwin, B.K., and Ker, A.P.. “Modeling Price and Yield Risk.” A Comprehensive Assessment of the Role of Risk in U.S. Agriculture. Just, R.E. and Pope, R.D., eds. Boston, MA: Kluwer Academic Press, 2002.Google Scholar
Greene, W.H.Econometric Analysis, 3rd ed. Upper Saddle River, NJ: Prentice Hall, 1997.Google Scholar
Hennessy, D.A., Babcock, B.A., and Hayes, D.J.. “Budgetary and Producer Welfare Effects of Revenue Insurance.” American Journal of Agricultural Economics 79(August 1997):1024–34.CrossRefGoogle Scholar
Hrubovcak, J., Vasavada, U., and Aldy, J.E.. Green Technologies for a More Sustainable Agriculture. Washington, DC: U.S. Department of Agriculture-Economic Research Service, Agricultural Information Bulletin No. 752, 1999.Google Scholar
Huang, W. “Using Insurance to Enhance Nitrogen Fertilizer Application Timing to Reduce Nitrogen Losses.” Journal of Agricultural and Applied Economics 34(April 2002):131–48.CrossRefGoogle Scholar
Huang, W, Heifner, R.G., Taylor, H., and Uri, N.D.. “Enhancing Nitrogen Fertilizer Application Timing by Insurance.” Journal of Sustainable Agriculture 16(2000):31–57.CrossRefGoogle Scholar
Johnson, M.E., and Tenenbein, A.. “A Bivariate Distribution Family with Specified Marginals.” Journal of the American Statistical Society 76(1981):198–201.CrossRefGoogle Scholar
Meyer, J. “Two-Moment Decision Models and Expected Utility Maximization.” American Economic Review 77(June 1987):421–30.Google Scholar
Mitchell, P.D. “Rating Methodology for Nutrient Management/Best Management Practice Insurance.” Department Technical Report 02-01, College Station, TX: Department of Agricultural Economics, Texas A&M University, August 2002.Google Scholar
Mitchell, P.D., and Hennessy, D.A.. “Factors Determining Best Management Practice Adoption Incentives and the Impact of Green Insurance.” Risk Management and the Environment: Agriculture in Perspective. Babcock, B.A., Fraser, R., and Lekakis, J., eds. Boston, MA: Kluwer Academic Press, 2003.Google Scholar
Mitchell, P.D., Hurley, T.M., Babcock, B.A., and Hellmich, R.L.. “Insuring the Stewardship of Bt Corn: A Carrot versus a Stick.” Journal of Agricultural and Resource Economics 27(December 2002):390–405.Google Scholar
Montgomery, B. Personal Communication. Minnesota Department of Agriculture, September 2002.Google Scholar
Nowak, P. “Why Farmers Adopt Production Technology.” Journal of Soil and Water Conservation 47(1992):14–16.Google Scholar
Olness, A., Evans, S.D., and Moncrief, J.E. “Maize Grain Yield Response to Tillage and Fertilizer Nitrogen Rates on a Tara Silt Loam.” Journal of Agronomy and Crop Science 174(May 1995):273–85.CrossRefGoogle Scholar
Paris, Q. “The von Liebig Hypothesis.” American Journal of Agricultural Economics 74(November 1992):1019–28.CrossRefGoogle Scholar
Paris, Q., and Knapp, K.. “Estimation of von Liebig Response Functions.” American Journal of Agricultural Economics 71(February 1989):178–86.CrossRefGoogle Scholar
Press, W.H., Teukolsky, S.A., Vetterling, WT., and Flannery, B.P.. Numerical Recipes in C++: The Art of Scientific Computing, 2nd ed. Cambridge, MA: Cambridge University Press, 1992.Google Scholar
Snedecor, G.W., and Cochran, W.G.. Statistical Methods, 8th ed. Ames, IA: Iowa State University Press, 1989.Google Scholar
Sri Ramaratnam, S., Bessler, D.A., Rister, M.E., Matocha, J., and Novak, J.. “Fertilization under Uncertainty: An Analysis Based on Producer Yield Expectations.” American Journal of Agricultural Economics 69(May 1987):349–57.CrossRefGoogle Scholar
U.S. Department of Agriculture-National Agricultural Statistics Service (USDA-NASS). “Published Estimates Data Base On Line.” Internet site: http://www.nass.usda.gov:81/ipedb/(Accessed October 24, 2002).Google Scholar
U.S. Department of Agriculture-Risk Management Agency (USDA-RMA). “Revision to the Best Management Practice Endorsement.” Kansas City, MO: Board Memorandum No. 665, Exhibit No. 2115, August 12, 2002. Internet site: http://www.rma.usda.gov/aboutrma/fcic/2002/812bmp.pdf (Accessed November 17, 2003).Google Scholar
U.S. Department of Agriculture-Risk Management Agency (USDA-RMA). Internet site: http://www.rma.usda.gov/policies/2003n-bmp.html (Accessed November 17, 2003).Google Scholar