Utility-Consistent Discrete-Continuous Choices in Soil Conservation

Abstract

A utility-consistent model of participation and participation intensity choices for a voluntary soil conservation program is developed. A modified form of Roy's Identity is used to derive a two-equation system that links the discrete, dichotomous choice (participation) and the continuous choice (intensity) to the same utility function. The model corrects for selectivity bias that arises in single-equation approaches. An application to a filter strip program in two counties in Illinois and Michigan demonstrates that different factors affect responses to the program across the sample regions. Estimated willingness-to-accept payments for participation in the program suggest policy impacts are not uniform across locations.

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