On the economic value of the agronomic effects of crop diversification for farmers

We estimate the effects of previous crops and crop acreage diversity on yields and chemical input uses. Our estimation approach relies on models of crop yields and input uses defined as systems of simultaneous equations featuring farm-specific random parameters. We find significant and consistent effects of previous crops on yield levels but not on input uses, suggesting that farmers tend to downplay these effects when deciding on their uses of chemical inputs. Our results also show that crop acreage diversity—which captures crop rotation diversity and, to a lesser extent, spatial crop diversity in our data—positively impacts yield levels and tends to induce reductions in pesticide uses. However, these effects are limited from an economic viewpoint.