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- Title
An Analysis of the Effects of Uncertainty and Irreversibility on Farmer Participation in the Conservation Reserve Program.
- Authors
Isik, Murat; Wanhong Yang
- Abstract
A real options model is developed to examine the determinants of farmer participation in the Conservation Reserve Program (CRP). This study contributes to the literature by developing a framework for ex post analysis of uncertainty and irreversibility. It extends the applications of real options models to analyze farmer participation in the CRP. The model incorporates land and owner attributes, and determines whether uncertainty and irreversibility affect the probability of participation. Option values play a significant role in farmer decisions to retire land by reducing the probability of participation. These results have implications for the design and implementation of conservation programs.
- Subjects
CROPLAND conversion program; AGRICULTURAL Conservation Program; FARMERS; UNCERTAINTY (Information theory); PROBABILITY theory; OPTION value; LANDOWNERS
- Publication
Journal of Agricultural & Resource Economics, 2004, Vol 29, Issue 2, p242
- ISSN
1068-5502
- Publication type
Article