Land Tenure, Conservation Tillage, and Other Risk Management Practices

The goal of this study is to test the effect of tenure on adoption on three risk reduction practices: conservation tillage, irrigation, and crop insurance. It also assesses how different risk reduction practices interact with each other. The study used stratified data from the USDA Census of Agriculture 2012 and 2017 surveys that divide observations into state-tenure status-year triplets. The Census divided farm data between full owners, partial owners, and full tenants. Univariate analysis found no negative affect of land leasing on conservation tillage adoption. In multiple regression analysis, however, there was evidence that part ownership was negatively associated with adoption of no till. No difference in adoption between full owners and full tenants was found.Irrigation adoption was greater in triplets in states with lower average annual precipitation, longer growing seasons, and warmer planting seasons. Irrigation adop- tion rates were lower in states with greater soil erosion. Some factors that contribute to greater soil erosion, such as steeper slopes or soils with lower water holding ca- pacity, also contribute to poorer irrigation performance. Experiencing drought over the previous five years was not found to increase state-level adoption of irrigation. Past findings on the relationship between crop insurance and adoption of con- servation tillage have been mixed. Some studies have found a negative association between the two, while other research suggests that crop insurance is not a barrier to conservation tillage adoption. We found no statistically significant association between crop insurance enrollment and conservation tillage adoption rates. Adoption of both reduced tillage and no till were lower in states with higher irrigation adoption rates. Controlling for other factors, this negative relationship was strong and statistically significant. This suggests that irrigation and conservation tillage might be substitute strategies for adapting to low soil moisture production 8 9 conditions. This study applied instrumental variable and simultaneous equation methods to account for the possibility of the endogeneity of tillage, insurance, and irrigation choice. For the different practice adoption (and enrollment) equations, results were sensitive to model specification (e.g. between reduced form least squares, two-stage instrumental variable, and three stage least squares methods). Also, it was found that the instruments used in the present study were weak instruments. Future simultaneous equation modeling would benefit from identification and use of stronger instruments