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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
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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

Information

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

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