Native Grassland Conversion: the Roles of Risk Intervention and Switching Costs

We develop a real option model of the irreversible native grassland conversion decision. Upon plowing, native grassland can be followed by either a permanent cropping system or a system in which land is put under cropping (respectively, grazing) whenever crop prices are high (respectively, low). Switching costs are incurred upon alternating between cropping and grazing. The effects of risk intervention in the form of crop insurance subsidies are studied, as are the effects of cropping innovations that reduce switching costs. We calibrate the model by using cropping return data for South Central North Dakota from 1989 to 2012. Simulations show that a risk intervention that offsets 20% of a cropping return shortfall increases the sod-busting cost threshold, below which native sod will be busted, by 41% (or $43.7/acre). Omitting cropping return risk across time underestimates this sod-busting cost threshold by 23% (or $24.35/acre), and hence underestimates the native sod conversion caused by crop production.

Report on a special investigation of the City of Muscatine for the period July 1, 2008 through March 8, 2012

Report on a special investigation of the City of Muscatine for the period July 1, 2008 through March 8, 2012

Special investigation of the Iowa Department of Transportation for the period January 29, 1994 through July 7, 2011

Special investigation of the Iowa Department of Transportation for the period January 29, 1994 through July 7, 2011

Special investigation of the University of Northern Iowa Events Complex Concessions for the period October 1, 2006 through March 31, 2012

Special investigation of the University of Northern Iowa Events Complex Concessions for the period October 1, 2006 through March 31, 2012

Report on a special investigation of the City of Indianola for the period June 1, 2006 through August 31, 2012

Report on a special investigation of the City of Indianola for the period June 1, 2006 through August 31, 2012

Report on a special investigation of the Lyon County Engineer’s Office for the period August 1, 2006 through May 31, 2012

Report on a special investigation of the Lyon County Engineer’s Office for the period August 1, 2006 through May 31, 2012

Report on a special investigation of the Creston Water Works for the period July 1, 2005 through November 16, 2012

Report on a special investigation of the Creston Water Works for the period July 1, 2005 through November 16, 2012

EPI Update: Special Alert, July 3, 2013

Weekly newsletter for Center For Acute Disease Epidemiology of Iowa Department of Public Health. SPECIAL ALERT

EPI Update: Special Alert, July 8, 2013

Weekly newsletter for Center For Acute Disease Epidemiology of Iowa Department of Public Health. SPECIAL ALERT

Report on special investigation of the Department of Inspections and Appeals, Office of the State Public Defender, for the period August 31, 2007 through March 31, 2011

Report on a special investigation of the State Public Defender’s Office for the period August 31, 2007 through March 31, 2011

EPI Update: Special Alert, July 12, 2013

Weekly newsletter for Center For Acute Disease Epidemiology of Iowa Department of Public Health. SPECIAL ALERT

EPI Update: Special Alert, July 19, 2013

Weekly newsletter for Center For Acute Disease Epidemiology of Iowa Department of Public Health. SPECIAL ALERT

Report on special investigation of the City of Farmington for the period July 1, 2009 through November 30, 2012

Special investigation of the City of Farmington for the period July 1, 2009 through November 30, 2012

Report on a special investigation of the City of Grand River for the period July 1, 2004 through March 7, 2012

Report on a special investigation of the City of Grand River for the period July 1, 2004 through March 7, 2012