Conservation practices such as no-till and cover crops have been shown to have on-and off-farm benefits. However, underinvestment may occur when benefits of a practice do not go to the provider. A commonly cited barrier to conservation-practice adoption in agriculture is farmland-rental arrangements where tenants may not reap the benefits of conservation investments, resulting in lower adoption rates on leased land than on owner-operated fields. This issue is especially important since more than 40% of US farmland and more than half of Midwestern farmland is now rented from others. This paper examines the factors driving landowners’ decisions to adopt four key conservation practices–no-till, cover crops, buffer strips, and ponds/sediment basins–using a statistically representative survey of Iowa landowners contrasting from the common datasets that focus on farm operators. Our results show that no-till and cover crops are used on 27% and 4% of Iowa farmland in 2017, respectively. We find that to the conventional wisdom that adoption is lower on rented land only applies to the use of cover crops, buffer strips, and sediment basins, but not for no-till. In fact, our results show the adoption rate of no-till is higher on leased land than on owner-operated land. This puzzle is mainly driven by the fact that part-time farmers have far less no-till on their owner-operated land than do other types of farmers, which could be because full-time farmers and renters use no-till as a timesaving technique. Also, no-till is heavily adopted in western Iowa, likely as a way to reduce wind erosion on loess-hill soils. Furthermore, we find that landowners are open to incentivizing the adoption of cover crops on their land by helping tenants pay part of the planting costs for cover crops but not by extending the length of rental agreements. In particular, those who currently own no-tilled land are more willing to help their tenants finance cover crops or offer longer leases than those who do not own no-tilled land. Finally, our results show that half of landowners would be willing to increase the area of their land under conservation practices, if they could receive conservation-related tax credits or deductions.
Original Release Date: May 23, 2019
Department of Economics, Iowa State University
Sawadgo, Wendiam; Zhang, Wendong; and Plastina, Alejandro, "What drives landowners’ conservation decisions? Evidence from Iowa" (2019). Economics Working Papers: Department of Economics, Iowa State University. 19018.