AGRICULTURAL LAND USE CHOICE: A DISCRETE CHOICE APPROACH

A discrete choice model and site-specific data are used to analyze land use choices between crop production and pasture in the Corn Belt. The results show that conversion probabilities depend on relative returns, land quality, and government policy. In general it is found that landowners are less inclined to remove land from crop production than to convert land to crop production.Land Economics/Use,

Greening Income Support and Supporting Green

A multitude of design decisions influence the performance of voluntary conservation programs. This Economic Brief is one of a set of five exploring the implications of decisions policymakers and program managers must make about who is eligible to receive payments, how much can be received, for what action, and the means by which applicants are selected. In particular, this Brief focuses on potential tradeoffs in combining income support and environmental objectives in a single program.Agricultural and Food Policy, Environmental Economics and Policy,

Crop Insurance, Disaster Payments, and Incentives for Land Use Change in Agriculture: A Preliminary Assessment

Crop Insurance, Disaster Payments, Supplemental Revenue Assistance, corn, wheat, Agricultural and Food Policy, Research Methods/ Statistical Methods, Risk and Uncertainty,

THE ECONOMICS OF GREEN PAYMENTS FOR REDUCING AGRICULTURAL NONPOINT SOURCE POLLUTION IN THE CORN BELT

We develop a watershed-based model of green payments to examine how payments applied to different environmental performance measures compare on the basis of economic efficiency, equity, and environmental outcomes. We also explore how targeting in the specification of water quality goals (e.g., TMDLs) affects program performance.Environmental Economics and Policy,

NEW CONSERVATION INITIATIVES IN THE 2002 FARM BILL

The role of agri-environmental programs has taken on increased importance in the current Farm Bill debate with an eighty percent increase in Title II funding. However, little empirical evidence exists on the tradeoffs between economic costs and environmental benefits of new agri-environmental programs to assist policymakers in their designs. This paper illustrates some of the budgetary and environmental issues inherent in these initiatives. Several policy options are explored using an environmental simulation model and an economic spatial-equilibrium model for U.S. agriculture. Results indicate abatement levels of nitrogen and pesticides are higher under performance-based policies and those for wind erosion and soil productivity are higher under practice-based policies. Abatement of phosphorus discharge, soil erosion and carbon sequestration remains relatively constant regardless of policy type. A national performance-based conservation policy funded at the $1 billion level has the potential to improve the environmental performance of U.S. farmers by as much as ten percent.Agricultural and Food Policy, Land Economics/Use,

ENVIRONMENTAL RISK AND AGRI-ENVIRONMENTAL POLICY DESIGN

Agricultural nonpoint pollution is inherently stochastic (e.g., due to weather). In theory, this randomness has implications for the choice and design of policy instruments. However, very few empirical studies have modeled natural variability. This paper investigates the importance of stochastic processes for the choice and design of alternative nonpoint instruments. The findings suggest that not explicitly considering the stochastic processes in the analysis can produce significantly biased results.Agricultural and Food Policy, Environmental Economics and Policy,

AGRICULTURAL CONSERVATION POLICY AT A CROSSROADS

U.S. agricultural conservation policy has focused on a range of potential policy instruments centered on voluntary approaches tied into Depression-era commodity programs. Entering the twenty-first century, conservation policy is at a crossroads between more coercive regulatory policies, more costly voluntary programs, and more facilitative market-oriented policies. What are the pitfalls, advantages, disadvantages, and tradeoffs along these paths?Agricultural and Food Policy,

Flexible Conservation Measures on Working Land: What Challenges Lie Ahead?

From 1985 to 2002, most Federal conservation dollars going to farm operators have been to retire land from crop production. Yet most U.S. farmland (850 million acres) remains in active production. The Farm Security and Rural Investment (FSRI) Act of 2002 sharply increased conservation funding and earmarked most of the increase for working-land payment programs (WLPPs). The design and implementation of WLPPs will largely determine the extent to which environmental goals are achieved and whether they are cost effective. We simulate potential environmental gains as well as adjustments in agricultural production, price, and income associated with various WLPP features to illustrate tradeoffs arising from WLPP design and implementation. Competitive bidding with the use of environmental indices to rank producers for enrollment is most cost effective. Payments based on past conservation will help support farm incomes, but limit the amount of additional environmental benefit that can be generated under a fixed budget.Land Economics/Use,

INSTRUMENT CHOICE AND BUDGET-CONSTRAINED TARGETING

We analyze how choosing to use a particular type of instrument for agri-environmental payments, when these payments are constrained by the regulatory authority's budget, implies an underlying targeting criterion with respect to costs, benefits, participation, and income, and the tradeoffs among these targeting criteria. The results provide insight into current policy debates.Research Methods/ Statistical Methods,

Crop Insurance, Disaster Payments and Land Use Change: The Effect of Sodsaver on Incentives for Grassland Conversion

Subsidized crop insurance may encourage conversion of native grassland to cropland. The Sodsaver provision of the 2008 farm bill could deny crop insurance on converted land in the Prairie Pothole states for 5 years. Supplemental Revenue Assistance payments, which are linked to crop insurance purchases, could also be withheld. Using representative farms, we estimate that Sodsaver would reduce expected crop revenue by up to 8% and expected net return by up to 20%, while increasing the standard deviation of revenue by as much as 6% of market revenue. Analysis based on elasticities from the literature suggests that Sodsaver would reduce grassland conversion by 9% or less.bootstrap, crop insurance, grassland, joint densities, Sodsaver, Supplemental Revenue Assistance, Agricultural and Food Policy, Production Economics, Risk and Uncertainty, Q2,