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,

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,

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,

EFFECTS OF AGRI-ENVIRONMENTAL PAYMENT POLICIES ON AGRICULTURAL TRADE

In many OECD countries, including the U.S., interest in developing agri-environmental payment programs is currently strong. In the future, the inclusion of an agri-environmental payment program into the WTO's "green box" could be more easily challenged by WTO member countries on the basis that it has more than "minimal" trade-distorting impacts on production. The goal of this paper is to conduct an ex ante analysis of the trade impacts of stylized examples of agri-environmental payment programs that have been proposed for implementation in the near future. To simulate the production and trade impacts of these programs, we use a partial equilibrium model of the U.S. agricultural sector in a sensitivity analysis across a range of design options for agri-environmental payments. For the three agri-environmental payment scenarios evaluated, the maximum change in exports ranges from a 7 percent decrease (wheat) to a 1 percent increase (soybeans). We do not expect the programs that decrease U.S. production, which would tend to have an upward pressure on world commodity prices, to be challenged before the WTO.Agricultural and Food Policy,

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,

The Ethanol Decade: An Expansion of U.S. Corn Production, 2000-09

The recent 9-billion-gallon increase in corn-based ethanol production, which resulted from a combination of rising gasoline prices and a suite of Federal bioenergy policies, provides evidence of how farmers altered their land-use decisions in response to increased demand for corn. As some forecasts had suggested, corn acreage increased mostly on farms that previously specialized in soybeans. Other farms, however, offset this shift by expanding soybean production. Farm-level data reveal that the simultaneous net expansion of corn and soybean acreage resulted from a reduction in cotton acreage, a shift from uncultivated hay to cropland, and the expansion of double cropping (consecutively producing two crops of either like or unlike commodities on the same land within the same year).Agricultural Resource Management Survey (ARMS), bioenergy, ethanol, indirect effects, land use, corn production, environmental impacts, Environmental Economics and Policy, Land Economics/Use, Resource /Energy 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,

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,

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,