The Adoption Model We begin by describing the theoretical justification for the existence of an adoption premium, and why the premium relates directly to payoff uncertainties, thereby allowing separate estimation of the premium and net returns of conservation tillage. [...] Turning now to the premium function, note that the theoretical basis for the presence of an adoption premium requires the presence of profit uncertainties of the two tillage practices. [...] The NRI provides information on the natural resource characteristics of the land (soil properties and slope), the crop grown (1992 and 1991 seasons), and the farming practices used by the producer. [...] These are (i) the unrestricted Model 1 where the explanatory variables OFFFARM, AGE, and MALE appear in both the net returns (the β ’s) and in the premium (the α ’s,); (ii) the restricted Model 1 in which the explanatory variables OFFFARM, AGE, and MALE appear in the net returns only (not reported); and (iii) the restricted Model 2 in which the explanatory variables OFFFARM, AGE, and MALE appear i. [...] However, similar to the effect of tenancy, the overall effect of this variable on the probability of adoption is about zero at the data means.7 We find a positive effect of farm size on the adoption premium, and thus a negative effect on the probability of adoption.
- Pages
- 26
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- United States of America