Date of Award

Fall 2020

Project Type

Thesis

Program or Major

Natural Resources and Environmental Studies

Degree Name

Master of Science

First Advisor

Shadi S Atallah

Second Advisor

Stuart Grandy

Third Advisor

Timothy Bowles

Abstract

Cover crop (CC) adoption is a promising conservation practice that provides multiple ecosystem services, such as reduced nitrate pollution and increased soil health. These CC ecosystem services have been demonstrated in the biogeochemistry literature. However, widespread adoption of CC in the Midwestern U.S. is still low, in part because there continues to be a debate about whether adopting CC is privately optimal for farmers and how climate change might affect the private incentives to adopt. Economic analyses of CC adoption are complicated by the difficulty to account for the economic benefits of CC ecosystem services, in a changing climate.

In this thesis, we developed a biogeochemical-economic model that estimates the ecosystem service benefits provided by CC under different climate scenarios on a corn-soybean farm and contrasts them with CC costs over 10 years. We used the DeNitrification-DeComposition (DNDC) model as the ecological production function in the biogeochemical-economic model. DNDC simulated changes in three non-market ecosystem services, namely soil water storage, soil organic matter accumulation, and N retention, with and without cover crops, and linked them to changes in corn yields and nitrogen fertilizer input.

The biogeochemical-economic model simulation results suggest that under most climate scenarios, and except for the case of constant extreme droughts, CC adoption does not generate a sizable difference in farm net present values (NPVs). Under historical Iowa weather (2004-2013), adopting CC reduces a farm’s NPV by 4%, relative to no CC adoption. However, if two years of drought occur in the 10 years, the difference in NPVs goes down to 0.5%. The ranking of NPVs is reversed in the most likely scenario where precipitation increases in the spring and decreases in the summer: adopting CC increases a farm’s NPV by 1.1%, relative to no CC adoption. This difference increases sizably when the farmer experiences a greater number of drought years. Under frequent extreme droughts, adopting CC increases a farm’s NPV by 15%, relative to no CC. This difference is explained by higher corn yields in the CC treatment, where corn yields were 15% higher under frequent extreme droughts. DNDC simulation results show that this yield increase is due to an increase in the following three ecosystem services in the CC system: improved soil water storage, soil organic matter accumulation, and N retention.

Finally, using the certainty equivalent measure, we found that the baseline results for a risk-neutral farmer do not change in the case of a moderately risk-averse farmer.

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