Tenants, landlords, and soil conservation.

These results imply that contract form and conservation investments are likely made simultaneously, so that econometric studies of conservation practice adoption that treat rental status as exogenous are likely subject to selection bias. For that reason, future empirical studies of conservation investment should consider tenure status as potentially endogenous.

A final note: The model analyzed in this article assumes that competition among tenants is sufficient to permit landlords to appropriate the full rent generated during the lease period. In some areas, though, there may be more competition among landlords for suitable tenants than the reverse (e.g., areas in developed countries with aging and declining farm populations). A formal analysis of this case is beyond the scope of this article. Intuitively, though, one might expect bargaining between landlords and tenants in such situations to give tenants a share of the long run gains from soil conservation, conceivably enough to attain first-best levels of both effort and conservation investment even under cash rental contracts. Further examination of this case is likely to be of interest.

I am grateful for the helpful suggestions of Bob Chambers, Ramon Lopez, Tigran Melkonyan, Lars Olson, and three anonymous Journal reviewers. Responsibility for any errors is mine alone.

[Received April 2005; accepted July 2006.]

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(1) Most empirical studies of soil conservation investment focus on conservation tillage, which typically lowers operating cost and hence should be a "win-win" option equally attractive to both landlords and tenants, all else equal. The few studies that examined durable conservation investments obtained somewhat contradictory results. Lynne, Shonkwiler, and Rola (1988) found that Florida growers who rented part (but not all) of the land they operated used a larger number of durable conservation practices than either pure renters or pure owner-operators but no significant difference in conservation practice adoption between pure renters and pure owner-operators. Lichtenberg (2004) found that the share of operated land rented by Maryland farmers had no statistically significant influence on the likelihood of adopting any of seven durable conservation measures. Myrra et al. (2005) found statistically significant differences between soils in owned and leased land in soil pH in all of Finland and in soil phosphorus in northern, but not southern Finland. Soule, Tegene, and Wiebe (2000) found statistically significant differences in the likelihood of one or more of three durable conservation practices between owner-operators, share renters, and cash renters. A comparison of predicted adoption probabilities calculated at subsample means supported the hypothesis that share renters were less likely to adopt than owner-operators and more likely to adopt than cash renters. A true ceteris paribus comparison using predicted adoption probabilities at full sample means calculated separately for each class of farmers as defined by the dummy variables used in the model suggests a more complex situation, with share renters being more likely to adopt one of these conservation measures than owner-operators or cash renters in some regions and less likely to adopt than owner-operators in other regions.

Erik Lichtenberg is professor, Department of Agricultural and Resource Economics, University of Maryland, College Park.