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Indirect Land Use Effects of Conservation: Disaggregate Slippage in the U.S. Conservation Reserve Program

Author

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  • Uchida, Shinsuke
Abstract
A cropland retirement policy contributes to the reduction of environmental externalities from agricultural production such as soil erosion, nutrient runoff and loss of wildlife habitat. On the other hand, participant's potential adverse behavior could undermine the environmental benefits of the policy. Several sources of such an unintended effect, known as “slippage", have been conceptually identified, but their empirical evidence has been scarce. This article tests one source of slippage caused by in-farm land substitution from noncropland to cropland as a result of farmland retirement in the U.S. Conservation Reserve Program (CRP). With the farm-level longitudinal data I can utilize cross-sectional and time variation of detailed individual farm characteristics to identify the causal relationship of CRP participation and subsequent slippage through in-farm land substitution. An identified assumption of the slippage estimate is verified by farm fixed effects, time-varying county fixed effects, and selection-on-observables. These could eliminate effects of unobservables that are potentially correlated with both the program participation and subsequent farmland reallocation decisions. Overall, slippage seems evident and fairly robust among specifications. It is found that an average program participant converts 14% of noncropland to cropping activities after enrollment. Results further show that participants with a larger share of uncropped land contribute more to slippage, indicating that farms with the excess capacity of conversion are more exible in the land allocation decision and thus likely to give rise to slippage. This suggests that additional restrictions on the rest of land use for participants and/or introduction of penalty points reecting the share of noncropland in the current auction mechanism can hinder such a backward incentive offsetting the program benefits.

Suggested Citation

  • Uchida, Shinsuke, 2014. "Indirect Land Use Effects of Conservation: Disaggregate Slippage in the U.S. Conservation Reserve Program," Working Papers 186644, University of Maryland, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:umdrwp:186644
    DOI: 10.22004/ag.econ.186644
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    References listed on IDEAS

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    1. Young, C. Edwin & Osborn, C. Tim, 1990. "The Conservation Reserve Program: An Economic Assessment," Agricultural Economic Reports 308084, United States Department of Agriculture, Economic Research Service.
    2. Robbin Shoemaker, 1989. "Agricultural Land Values and Rents under the Conservation Reserve Program," Land Economics, University of Wisconsin Press, vol. 65(2), pages 131-137.
    3. Holt, Matthew T., 1999. "A Linear Approximate Acreage Allocation Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-15, December.
    4. Feather, Peter & Hellerstein, Daniel & Hansen, LeRoy T., 1999. "Economic Valuation of Environmental Benefits and the Targeting of Conservation Programs: The Case of the CRP," Agricultural Economic Reports 34027, United States Department of Agriculture, Economic Research Service.
    5. Ruben N. Lubowski & Michael J. Roberts, 2005. "How Cost-Effective Are Land Retirement Auctions? Estimating the Difference between Payments and Willingness to Accept in the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1239-1247.
    6. Michael J. Roberts & Shawn Bucholtz, 2005. "Slippage in the Conservation Reserve Program or Spurious Correlation? A Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 244-250.
    7. Lehmann, Paul, 2005. "An economic evaluation of the U.S. Conservation Reserve Program," UFZ Discussion Papers 1/2005, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
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    Cited by:

    1. Alexander Pfaff & Juan Robalino, 2017. "Spillovers from Conservation Programs," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 299-315, October.

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    Keywords

    Agricultural and Food Policy; Land Economics/Use;

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