A whole-farm model was used to investigate the interacting effects of precision agriculture technology and agro-environmental policy on the production choices of a representative grain farm. Although some precision agriculture technologies did increase efficiency of resource use, they also decreased the effectiveness of policy, especially policies that rely on economic incentives (e.g., emission taxes). Precision agriculture can lead to higher marginal abatement costs in the form of forgone profits, decreasing producers' responsiveness to those policies. Policy-makers targeting pollution reductions from agriculture should take into account the increasing use of precision agriculture techniques and their varying effects on agro-environmental policy.
