Research & Projects

Conservation programs differ in how they reward farmers: practice-based programs compensate for adopting management practices, while outcome-based programs pay for measured environmental improvements. Yet the private costs of compliance under these alternative designs remain unclear. We develop a duality-based framework to value agricultural environmental services under policy-consistent normalizations. A normalization selects a numeraire that reflects program objectives and determines how trade-offs among market and environmental outcomes are evaluated. Using Illinois corn production data, we demonstrate that practice-based normalizations result in lower shadow prices for carbon sequestration and greenhouse gas abatement, whereas outcome-based normalizations yield higher costs. Erosion control shows limited variation. By establishing shadow prices as policy-dependent measures, the framework provides a consistent economic basis for comparing conservation programs and setting incentive payments that align private management with environmental goals. 

We derive shadow prices of carbon services provided by cover crops relative to non-cover-crop agricultural practices, accounting for carbon sequestration and greenhouse gas (GHG) emissions. We model the agricultural technology by integrating crop production, carbon sequestration, and GHG emissions. We derive a novel function representation of our technology using a data envelopment analysis (DEA). We then calculate shadow prices based on the dual representation of the technology and compare shadow prices between cover-crop and non-cover-crop fields. We find that the carbon sequestration and the GHG emissions reduction services from cover-crop fields relative to non-cover-crop fields are worth USD 17.88 and USD 9.42 per acre, respectively. We compare shadow prices to payments from an incentive program aimed at promoting cover-crop adoption, thereby highlighting the economic feasibility and potential barriers to adopting sustainable practices.

Extreme weather events, including excessive heat, prolonged droughts, and intense precipitation, are becoming increasingly common due to climate change. As a result, farmers are encountering challenges in maintaining consistent crop yields and quality. These escalating events present significant challenges to agricultural crop production. 

Given the increasing frequency of extreme weather events and greater climatic variability, sustainable agricultural practices are gaining importance. Farmers are seeking strategies to mitigate risks and maintain productivity in response to these challenges. For example, cover cropping and conservation tillage operations are recognized as sustainable approaches that can help mitigate extreme weather impacts while reducing environmental harm and enhancing farm productivity. 

The study’s main goal is to assess the role of adaptation measures to extreme weather events used by farmers in agricultural production. Specifically, this study aims to determine whether adopting environmentally friendly management practices can enhance agricultural productivity and to provide valuable insights into sustainable practices’ effectiveness in changing climate patterns, informing future agricultural strategies and policies.