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Replaced with revised version of paper 03/06/08.
This paper shows that spatial panel data models can be successfully applied to an econometricanalysis of farm-scale precision agriculture data. The application focuses on the estimation of theeffect of controlled drainage water management equipment on corn yields. Using field-levelprecision agriculture data and spatial panel techniques, the yield response equation is estimatedusing the spatial autoregressive error random effects model with temporal heterogeneity,incorporating spatial dependence in the error term, while controlling for the topography, weatherand the controlled drainage treatment. Controlling for random effects allows for thedisentanglement of the effects of spatial dependence from spatial heterogeneity and omittedvariables, and thus, to properly investigate the yield response. The results show that controlleddrainage has a statistically significant effect on corn yields. The effect is generally positive butvaries widely from year to year and field-to-field. For the two years of data controlled drainagewas linked to a 2.2% increase in field average yield, but that varied from a -2.6% to a +6.5%.Evaluated at mean elevation and slope in the east part of the field, controlled drainage isassociated with 10 bu/a increase and a 0.6 bu/a decrease in yields in 2005 and 2006, respectively.In the West part of the field, controlled drainage is associated with a 11 bu/a increase in 2006and 2.81 bu/a decrease in 2005.
