In both the academic and popular literatures on precision agriculture technology, a management zoneis generally defined as an area in a field within which the optimal input application strategy is spatially uniform.  The characteristics commonly chosen to delineate management zones, both in the literature and in commercial practice, are yield and variables associated with yield.  But microeconomic theory makes clear that economically optimal input application strategies do not necessarily depend on yield levels; rather, they depend on the responses of yields to inputs. Therefore using “yield zones” to determine “management zones” is likely to be a suboptimal strategy, and these zones should instead be delineated using characteristics that affect the yields’ response to inputs. Specifically, a management zone should be an area of the field with the same marginal product function with respect to the input being managed. 

            This paper reports research that uses data from a 2017 full-field randomized agronomic trial to assess the impact on economic profits of these the yield-based and economic-theory-based approaches to nitrogen management zone delineation. The response of yield to many different factors, including managed inputs and soil and field characteristics (e.g., electroconductivity and slope), is known as a yield function, and the marginal product of nitrogen is the derivative of this function with respect to nitrogen. Estimation of the yield function for this field used a quadratic form, and considered both a full set of covariates containing results of a soil test and a subset of the covariates with only electroconductivity and topography variables. Results indicate a spatial error model is appropriate as shown by a significant nonzero Moran’s I on the error terms from the OLS estimation. Additionally, results indicate there is information contained in the soil tests that impacts yield estimation but the value is not estimated in this preliminary work. 

            The results of this research inform both future literature and commercial activity in precision agriculture. With the establishment of theoretically consistent new methods for delineating management zones, management advice may improve, and the value of data collection such as soil sampling and electroconductivity measurement can be increased.