Economic analysis of adopting no‐till and cover crops in irrigated cotton production under risk

Abstract

AbstractAdoption of soil conservation practices has been promoted to improve environmental and economic benefits across the United States. These practices are especially necessary for soil health improvement in the Southern High Plains where soils are prone to erosion and agricultural irrigation relies heavily on groundwater. Winter cover crops and no‐till cropping are two conservation practices for reducing soil erosion, but producers might face additional risks associated with adopting these practices. The objective of this study was to examine the profitability and risks associated with alternative tillage and cover crops (no cover crop, winter wheat [Triticum asestivum L.], and grass–legume mixture) for irrigated cotton (Gossypium hirsutum L.). Using data from a 6‐yr field experiment, net return distributions of each production system were evaluated and ranked across various risk aversion levels. The results showed that the average net returns were $1040 and $1049 ha−1 for conventionally tilled and no‐till cotton without a cover crop, while the net returns were $1121 and $1075 ha−1 for no‐till cotton with wheat and mixed cover crops, respectively. Producers adopting cover crops had a greater probability of getting a middle interval of net returns between $760 and $1370 ha−1. The results of risk analysis show that risk‐neutral and slightly risk‐averse producers prefer no‐till cotton production with wheat cover, while no‐till with mixed and wheat cover are the first and second most preferred systems for very and extremely risk‐averse producers. Sensitivity analysis confirms consistent profit effects of cover crops and no‐till adoption at multiple cotton price levels.