Effects of conservation tillage on the performance of Lake Erie basin farms

This paper summarizes research that investigates the effects of alternative farming practices on the performance of Lake Erie basin farms. First, data from a representative panel of about 100 farmers is analyzed to determine how conservation tillage, rotations, and other factors affected farms' economic returns during 1987-1992. Statistical analysis of these data is unable to demonstrate that there is any significant relationship between farming system (i.e., tillage and rotation) variables and farm profitability. Next, a farm-level bioeconomic simulation model is used to analyze the effects of conservation tillage adoption on farm profitability, farm size, and pollutant emissions. Findings are that tillage system, farm size, and crop selection are determined jointly and may substantially improve economic performance of farms. Conservation tillage enables farms to be larger and more specialized, and as a result, farm profitability improves. Statistical analysis of farm panel data is unable to show the effect of tillage on profitability because it neglects to account for endogeneity of variables (or joint effects of tillage, size, crop selection, and performance) in production decisions.