[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ias/cpaper/14-wp553.html
   My bibliography  Save this paper

Assessing Cost-Effectiveness of the Conservation Reserve Program and its Interaction with Crop Insurance Subsidies

Author

Abstract
Strong demand for agricultural commodities, high crop prices and pressure to reduce government budget deficits heighten the need for land retirement programs to be designed to maximize environmental benefits for any given budget outlay. The Conservation Reserve Program (CRP) is the largest land retirement program while the federal crop insurance program (FCIP) is the largest federal program supporting U.S. agriculture. We examine the environmental and budgetary implications of alternative CRP enrollment mechanisms in the context of the program's interactions with FCIP. We demonstrate that the current CRP enrollment mechanism is inconsistent with cost-effective targeting. We also identify a cost-effective targeting enrollment mechanism that maximizes total environmental benefits under a budget constraint. Since federal crop insurance subsidies will not be incurred when a tract of land is retired from agricultural production, we consider the impacts when avoided subsidies are accounted for in designing a land-retirement program. Based on contract-level CRP offer data in 2003 and 2011 across the contiguous United States, we find that adopting the cost-effective targeting enrollment mechanism can increase CRP acreage by up to 45% and total environmental benefits by up to 21% while leaving government outlay unchanged. Incorporating crop insurance subsidies into the land retirement design can increase avoided subsidies caused by CRP enrollment and environmental benefits obtained from CRP. The government can enroll significant acres at zero real cost. Under cost-effective targeting, CRP acreage and payments would increase in the Great Plains and the Southeastern states but would decrease in the Midwest.

Suggested Citation

  • Ruiqing Miao & Hongli Feng & David A. Hennessy & Xiaodong Du, 2014. "Assessing Cost-Effectiveness of the Conservation Reserve Program and its Interaction with Crop Insurance Subsidies," Center for Agricultural and Rural Development (CARD) Publications 14-wp553, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:14-wp553
    as

    Download full text from publisher

    File URL: https://www.card.iastate.edu/products/publications/pdf/14wp553.pdf
    File Function: Full Text
    Download Restriction: no
    File URL: https://www.card.iastate.edu/products/publications/synopsis/?p=1232
    File Function: Online Synopsis
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. JunJie Wu, 2000. "Slippage Effects of the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 979-992.
    2. Jacobson, Sarah, 2014. "Temporal spillovers in land conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 366-379.
    3. Feng, Hongli & Kurkalova, Lyubov A. & Kling, Catherine L. & Gassman, Philip W., 2006. "Environmental conservation in agriculture: Land retirement vs. changing practices on working land," Journal of Environmental Economics and Management, Elsevier, vol. 52(2), pages 600-614, September.
    4. Babcock, Bruce A. & Lakshminarayan, P. G. & Wu, JunJie & Zilberman, David, 1996. "Economics of a Public Fund for Environmental Amenities (The)," Staff General Research Papers Archive 1065, Iowa State University, Department of Economics.
    5. Hellerstein, Daniel & Malcolm, Scott, 2011. "The Influence of Rising Commodity Prices on the Conservation Reserve Program," Economic Research Report 262244, United States Department of Agriculture, Economic Research Service.
    6. David Zilberman, 1996. "The Economics of a Public Fund for Environmental Amenities: A Study of CRP Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 961-971.
    7. Joseph W. Glauber, 2013. "The Growth Of The Federal Crop Insurance Program, 1990--2011," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 482-488.
    8. 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.
    9. repec:reg:rpubli:98 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Miao, Ruiqing & Hennessy, David A. & Feng, Hongli, 2016. "The Effects of Crop Insurance Subsidies and Sodsaver on Land-Use Change," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(2), May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hongli Feng & Catherine L. Kling & Lyubov A. Kurkalova & Silvia Secchi & Philip W. Gassman, 2005. "The Conservation Reserve Program in the Presence of a Working Land Alternative: Implications for Environmental Quality, Program Participation, and Income Transfer," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1231-1238.
    2. Mykel R. Taylor & Nathan P. Hendricks & Gabriel S. Sampson & Dillon Garr, 2021. "The Opportunity Cost of the Conservation Reserve Program: A Kansas Land Example," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 849-865, June.
    3. Brian Cornish & Ruiqing Miao & Madhu Khanna, 2022. "Impact of changes in Title II of the 2018 Farm Bill on the acreage and environmental benefits of Conservation Reserve Program," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(2), pages 1100-1122, June.
    4. Feng, Hongli & Kling, Catherine L. & Kurkalova, Lyubov A. & Secchi, Silvia, 2007. "Cac Versus Incentive-Based Instruments in Agriculture: The Case of the Conservation Reserve Program," Staff General Research Papers Archive 10796, Iowa State University, Department of Economics.
    5. Baylis, Kathy & Peplow, Stephen & Rausser, Gordon & Simon, Leo, 2008. "Agri-environmental policies in the EU and United States: A comparison," Ecological Economics, Elsevier, vol. 65(4), pages 753-764, May.
    6. Claassen, Roger & Cattaneo, Andrea & Johansson, Robert, 2008. "Cost-effective design of agri-environmental payment programs: U.S. experience in theory and practice," Ecological Economics, Elsevier, vol. 65(4), pages 737-752, May.
    7. Zilberman, David & Segerson, Kathleen, 2012. "Top Ten Design Elements to Achieve More Efficient Conservation Programs," C-FARE Reports 156623, Council on Food, Agricultural, and Resource Economics (C-FARE).
    8. Assogba, Noel Perceval & Zhang, Daowei, 2022. "The conservation reserve program and timber prices in the southern United States," Forest Policy and Economics, Elsevier, vol. 140(C).
    9. Yang, Wanhong & Isik, Murat, 2003. "Integrating Farmer Decision-Making to Target Land Retirement Programs," 2003 Annual meeting, July 27-30, Montreal, Canada 22062, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Whitten, Stuart M., 2017. "Designing and implementing conservation tender metrics: Twelve core considerations," Land Use Policy, Elsevier, vol. 63(C), pages 561-571.
    11. Khanna, Madhu & Isik, Murat & Zilberman, David, 2002. "Cost-effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality," Agricultural Economics, Blackwell, vol. 27(2), pages 157-174, August.
    12. Cattaneo, Andrea & Bucholtz, Shawn & Dewbre, Joe & Nickerson, Cynthia J., 2002. "The Crp Balancing Act: Trading Off Costs And Multiple Environmental Benefits," 2002 Annual meeting, July 28-31, Long Beach, CA 19810, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Feng, Hongli & Kurkalova, Lyubov A. & Kling, Catherine L. & Gassman, Philip W., 2006. "Environmental conservation in agriculture: Land retirement vs. changing practices on working land," Journal of Environmental Economics and Management, Elsevier, vol. 52(2), pages 600-614, September.
    14. Wright, Andrew P. & Hudson, Darren, 2013. "Applying a Voluntary Incentive Mechanism to the Problem of Groundwater Conservation: An Experimental Approach," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143030, Southern Agricultural Economics Association.
    15. Wu, JunJie & Weber, Bruce, 2012. "Implications of a Reduced Conservation Reserve Program," C-FARE Reports 156625, Council on Food, Agricultural, and Resource Economics (C-FARE).
    16. Jean-Sauveur Ay, 2015. "Information sur l’hétérogénéité de la terre et délégation de la régulation foncière," Revue d'économie politique, Dalloz, vol. 125(3), pages 453-474.
    17. Newburn, David A. & Berck, Peter & Merenlender, Adina, 2004. "Spatial Targeting Strategies For Land Conservation," 2004 Annual meeting, August 1-4, Denver, CO 20206, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Khanna, Madhu & Yang, Wanhong & Farnsworth, Richard L. & Onal, Hayri, 2002. "Evaluating The Cost Effectiveness Of Land Retirement Programs," 2002 Annual meeting, July 28-31, Long Beach, CA 19740, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Kathleen Segerson, 2013. "Voluntary Approaches to Environmental Protection and Resource Management," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 161-180, June.
    20. Xue Xie & Hualin Xie & Cheng Shu & Qing Wu & Hua Lu, 2017. "Estimation of Ecological Compensation Standards for Fallow Heavy Metal-Polluted Farmland in China Based on Farmer Willingness to Accept," Sustainability, MDPI, vol. 9(10), pages 1-18, October.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ias:cpaper:14-wp553. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/caiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.