Incorporating drainage discharge into the trade-off between economic maize gains and nitrogen leaching loss using farmers’ utility function

Abstract

Preferences regarding the trade-off between yield and environmental externalities depend on climate conditions. Because drainage discharge influences yield, nitrogen leaching, runoff, and soil moisture, this study examines how drainage discharge affects the trade-off between maize yield and nitrogen leaching in terms of farmers’ utility. Specifically, this study ( i ) estimated the marginal utilities of maize yield and nitrogen leaching for 421 maize-site years across the U.S. and Canada from 1973 to 2012; ( ii ) classified behaviors as fully rational, economically rational, environmentally rational, or inconsistent; and ( iii ) evaluated the effects on behavior using the difference between log-transformed nitrogen leaching and drainage discharge as an adjustment term. The results showed that the likelihood of economically rational behavior increased under the following conditions: ( i ) increasing yield for maize terrains where the marginal utilities of yield and nitrogen leaching are both positive and increasing (Category 1), and where the marginal utility of yield is positive and decreasing while that of nitrogen leaching is positive and increasing (Category 3); ( ii ) increasing nitrogen leaching for maize terrains in Category 3; ( iii ) increasing the rate of nitrogen leaching for maize terrains where the marginal utilities of yield and nitrogen leaching are positive-increasing and negative-increasing, respectively (Category 2), and where both marginal utilities are positive and decreasing (Category 4); and ( iv ) increasing substitutability between yield and nitrogen leaching for maize terrains in Category 1. The effects of drainage discharge on utility were greatest under extreme conditions, showing its potential to incorporate climate variability into strategies that balance environmental benefits and farm profitability.