Investment in site-specific crop management under uncertainty: implications for nitrogen pollution control and environmental policy
运用期权定价模型，研究产出价格不确定性和固定成本下降预期如何影响农户投资定点作物管理的最佳时机，发现考虑期权价值后，除非土壤质量高且变异大，否则延迟投资至少3年更优，且所需补贴率高于净现值规则预测。
This paper applies an option-pricing model to analyze the impact of uncertainty about output prices and expectations of declining fixed costs on the optimal timing of investment in site-specific crop management (SSCM). It also analyzes the extent to which the level of spatial variability in soil conditions can mitigate the value of waiting to invest in SSCM and influence the optimal timing of adoption and create a preference for custom hiring rather than owner purchase of equipment. Numerical simulations show that while the net present value (NPV) rule predicts that immediate adoption is profitable under most of the soil conditions considered here, recognition of the option value of investment indicates that it is preferable to delay investment in SSCM for at least 3 years unless average soil quality is high and the variability in soil quality and fertility is high. The use of the option value approach reveals that the value of waiting to invest in SSCM raises the cost-share subsidy rates required to induce immediate adoption above the levels indicated by the NPV rule.