Agriculture is a managed ecosystem. The decisions of its managers, the farmers, drive the mix of ecosystem services (ES) that it produces. The thesis is divided into two essays. Essay 1 develops tradeoff analysis between profitability and selected environmental indicators for different types of cropping systems using data from agronomic field trials. The tradeoff frontiers developed in the study are profit vis-à-vis global warming potential (GWP) and nitrate leaching. Both reveal that the conventional corn-soybean-wheat rotation treatment is dominated. The organic treatment is dominated unless certified organic prices are used. The no-till cropping system shows potential as an efficient choice for the farmer, as does alfalfa for its GWP. The tradeoffs between no-till and alfalfa for GWP and no-till with certified organic imply that there are opportunity costs to changing cropping systems in order to provide more nonmarketed ES.

Essay 2 uses survey data to examine farmers' willingness to enroll in a program that compensates them for adopting environmental stewardship. Results show that Michigan farmers' acreage enrollment decisions depend consistently on farm size and the perception of environmental improvements from the practices. For farms over 500 acres, the payment offered was also a significant inducement to acreage enrollment in all systems examined. The second essay advances the literature on adoption of agro-environmental practices by developing a supply function for crop acreage managed for environmental stewardship. Like prior studies of environmental technology adoption in agriculture, we find that environmental attitudes and affiliations, age, education and current farming practices are influential. But we also find that the low cost suppliers of environmental services are the largest farms. Agricultural policies based on payment for environmental services that aim for cost-effective environmental impact will likely achieve most of their impact from larger farms.