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Title: Using the response surface methodology for economic and environmental trade-offs at the farm level

Author
item Ascough Ii, James
item FATHELRAHMAN, EIHAB - Colorado State University
item HOAG, DANA - Colorado State University

Submitted to: Trade Journal Publication
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 2/25/2013
Publication Date: 6/17/2013
Citation: Ascough II, J.C., Fathelrahman, E.M., Hoag, D.L. 2013. Using the response surface methodology for economic and environmental trade-offs at the farm level. J. Air, Soil and Water Research. 6:73-89.

Interpretive Summary: Increase in N use has been associated with the impairment of U.S. streams, lakes, and aquifers. The objective of this research was to develop an integrated farm-level economic and risk analysis framework for tradeoff analysis between farm profitability and environmental externalities. We used field data from experimental treatments carried out from 1990-2003 on 36 0.4-ha plots at the Northeast Iowa Agricultural Research and Demonstration Farm in Nashua, IA USA. Experimental data were used to estimate an economic budget for each plot in order to assess costs and profitability (gross margin). A constrained Response Surface Method (RSM), including selected optimization algorithms, was employed to find the optimum surface regions of corn and soybean profitability subject to two constraints representing environmental externalities - N measured in tile drainage and total N measured in the soil profile from each experimental plot. Results indicated that there was no one single point of optimal tradeoff between economics and the environment, and that tradeoffs between a farmer’s profit and environmental externalities vary significantly depending on the choice of crop, crop rotation, and tillage system.

Technical Abstract: United States farmers typically spend over $10 billion annually on commercial fertilizer. Chemical inputs such as nitrogen (N) are essential for maintaining crop yields; however, farmers may apply excessive N inputs as an insurance policy. Nitrogen fertilizer consumption in the U.S. quadrupled from 3 metric million tons in 1961 to over 12 metric million tons in 2004, and per ha N fertilizer use also quadrupled (from 20 kg/ha to 87 kg/ha) during the same period. Increase in N use has been associated with the impairment of U.S. streams, lakes, and aquifers. The objective of this research was to develop an integrated farm-level economic and risk analysis framework for tradeoff analysis between farm profitability and environmental externalities. We used field data from experimental treatments carried out from 1990-2003 on 36 0.4-ha plots at the Northeast Iowa Agricultural Research and Demonstration Farm in Nashua, IA USA. Experimental data were used to estimate an economic budget for each plot in order to assess costs and profitability (gross margin). A constrained Response Surface Method (RSM), including selected optimization algorithms (i.e., steepest descent or ascent), was employed to find the optimum surface regions of corn and soybean profitability subject to two constraints representing environmental externalities - N measured in tile drainage and total N measured in the soil profile from each experimental plot. Results indicated that there was no one single point of optimal tradeoff between economics and the environment, and that tradeoffs between a farmer’s profit and environmental externalities vary significantly depending on the choice of crop, crop rotation, and tillage system.