Farmer Premiums for the Voluntary Adoption of Conservation Plans

43 Pages Posted: 9 May 2002

See all articles by Giovanni Signorello

Giovanni Signorello

Department of Agriculture, Food and Environment

Joseph C. Cooper

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: April 2002

Abstract

Utilizing the random utility and random profit difference approaches, we develop a theoretical model that explains why farmers may require a premium in excess of the decrease in profits to adopt a conservation plan. Identification of this risk premium can aid the government in addressing approaches to lowering the costs of encouraging farmers to adopt the conservation programs. Previous work done in this area has not successfully identified this premium We estimate this premium using survey of farmers in conjunction with predictions of changes in production costs. To increase the efficiency of the econometric analysis of survey responses, we use the so-called "one-and-one-half-bound" (OOHB) elicitation format. Furthermore, to test the sensitivity of our estimation results to functional form and distributional specifications, we compare the results utilizing parametric, nonparametric, and semi-nonparametric econometric approaches.

Keywords: Risk premium, contingent valuation, willingness to accept, one-and-one-half-bound discrete choice elicitation format, agri-environmental practices

JEL Classification: Q14, Q25

Suggested Citation

Signorello, Giovanni and Cooper, Joseph C., Farmer Premiums for the Voluntary Adoption of Conservation Plans (April 2002). Available at SSRN: https://ssrn.com/abstract=311024 or http://dx.doi.org/10.2139/ssrn.311024

Giovanni Signorello (Contact Author)

Department of Agriculture, Food and Environment ( email )

Via Santa Sofia, 100
95123 Catania, 95123
Italy
+39 095 7580320 (Phone)
+39 095 7580345 (Fax)

HOME PAGE: http://www.di3a.unict.it/docenti/giovanni.signorello

Joseph C. Cooper

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5470 (Phone)
202-694-5776 (Fax)

HOME PAGE: http://www.reeusda.gov/ree/reedir/de000190.htm#190

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