This paper applies an option-pricing model to analyze the impact of uncertainty about output prices and expectations of declining fixed costs on the optimal timing of investment in site-specific crop management (SSCM). It also analyzes the extent to which the level of spatial variability in soil conditions can mitigate the value of waiting to invest in SSCM and influence the optimal timing of adoption and create a preference for custom hiring rather than owner purchase of equipment. Numerical simulations show that while the net present value (NPV) rule predicts that immediate adoption is profitable under most of the soil conditions considered here, recognition of the option value of investment indicates that it is preferable to delay investment in SSCM for at least 3 years unless average soil quality is high and the variability in soil quality and fertility is high. The use of the option value approach reveals that the value of waiting to invest in SSCM raises the cost-share subsidy rates required to induce immediate adoption above the levels indicated by the NPV rule. 0 (M. Khanna). ent uptake as low as 30% of the applied nitrogen by plants (Legg and Meisinger, 1982).Site-specific crop management (SSCM) provides an input efficiency enhancing alternative to conventional methods by acquiring information about spatial variability in soil conditions and using it to target input applications to match that variability. It relies on several interrelated components that include grid-based soil sampling and yield monitors linked to satellite-based global positioning systems (GPS) that provide geo-referenced information about the agronomic conditions and yields at various points in the field and identify the need for spatial variation in input application. Variable rate technologies (VRT) then use this information to vary input flow rates on-the-go, 0169-5150/00/$ -see front matter 0 2000 Elsevier Science B.V. All rights reserved. PII: S 0 1 6 9 -5 1 5 0 ( 0 0 ) 0 0 1 11-0