THE IMPACT OF GOVERNMENT PROGRAMS AND LAND CHARACTERISTICS ON CROPPING PATTERNS

Acreage response equations for nine major crops of Wisconsin are estim ated to determine the impacts of government programs and site characte ristics (e.g., soil types, slope and rainfall) on cropping patterns. S ite characteristics account for more than twice as much acreage variat ion as the economic and policy variables. Three policy simulations are conducted: a 10% reduction in the target price for corn; an increase in the Acreage Reduction Program (ARP) rate for corn from 10% to 20%; and a 10% increase in chemical price, due, for example, to a tax. Redu cing the target price for corn would result in both a land reallocatio n among the nine crops and a reduction in total acreage. However, adju sting the ARP rate of corn would affect mainly the land allocation, an d a tax on chemical use would generally reduce the total acreage of th e nine crops. The results suggest that all three policies would be eff ective overall in reducing the total acreage of the chemical-intensive crops and thus would reduce the potential for groundwater pollution. This article also develops and uses a method to correct heterosecedast icity, autocorrelation, and contemporaneous correlation that may arise in a set of seemingly unrelated equations.