The Environmental Quality Incentives Program (EQIP) provides farmers with financial and technical assistance to plan and implement soil and water conservation practices. EQIP was enacted in 1996 and most recently amended by the Farm Security and Rural Investment Act of 2002 (Section 2301 of P.L. 107-171). It is a mandatory spending program (i.e., not subject to annual appropriations), administered by the Natural Resources Conservation Service (NRCS). EQIP is guaranteed a total of $6.1 billion from FY2002 through FY2007 from the Commodity Credit Corporation (CCC), making it the largest conservation cost-sharing program

Canada, Carol

Zinn, Jeffrey A.

Zinn, Jeffrey

UNT Digital Library

1 The CCC is administered by a Board of Directors from agencies of the Department ofAgriculture.  It has no staff, and all work done on its behalf is performed by staff of agencieswithin USDA.  For EQIP, NRCS provides the staff.Congressional Research Service ˜ The Library of CongressCRS Report for CongressReceived through the CRS WebOrder Code RS22040Updated August 15, 2006Environmental Quality Incentives Program(EQIP): Status and IssuesCarol CanadaTechnical Information SpecialistResources, Science, and Industry DivisionJeffrey ZinnSpecialist in Natural Resources PolicyResources, Science, and Industry DivisionSummaryThe Environmental Quality Incentives Program (EQIP) provides farmers withfinancial and technical assistance to plan and implement soil and water conservationpractices.  EQIP was enacted in 1996 and amended by the Farm Security and RuralInvestment Act of 2002 (Section 2301 of P.L. 107-171).  It is a mandatory spendingprogram (i.e., not subject to annual appropriations) administered by the NaturalResources Conservation Service.  EQIP is guaranteed a total of $10.0 billion fromFY2002 through FY2010 from the Commodity Credit Corporation (CCC), making it thelargest conservation financial assistance program.1  Issues about EQIP that Congressmay explore as it starts to consider the next farm bill include (1) reducing the pendingbacklog of applications, (2) measuring the program’s accomplishments, and (3) usingEQIP to address specific topics or needs in specified locations. This report will beupdated as circumstances warrant. BackgroundEQIP is the principal source of financial assistance (cost-sharing payments andincentive payments) for agricultural producers who wish to implement soil and waterconservation practices.  It also provides participants with technical assistance.Participation is voluntary.  EQIP was created by the Federal Agriculture Improvement andReform Act of 1996 (P.L. 104-127, April 4, 1996) and replaced four conservationprograms repealed in the same law.  These were the Great Plains Conservation Program,CRS-22 “Environmental Quality Incentives Program Final Rule,” Federal Register, vol. 68, no. 104,May 30, 2003, pp. 32337-32355.3 For more information on TMDLs, see CRS Report 97-831, Clean Water Act and TotalMaximum Daily Loads of Pollutants, by Claudia Copeland.the Agricultural Conservation Program (ACP), the Water Quality Incentives Program, andthe Colorado River Basin Salinity Control Program.  EQIP Program TodayEQIP is administered by the U.S. Department of Agriculture’s Natural ResourcesConservation Service (NRCS) under a final rule, published in the May 30, 2003, FederalRegister.2  This rule implements amendments to the program enacted in the Farm Securityand Rural Investment Act of 2002 (Section 2301 of P.L. 107-171, May 13, 2002),commonly referred to as the 2002 farm bill.  EQIP’s legislative mandate is to optimizeenvironmental benefits.  NRCS implemented this by establishing national priorities toreflect the most pressing natural resource needs and emphasize off-site benefits to theenvironment.  NRCS considers these national priorities in allocating funds to states andestablishing cost-share and incentive payment levels.  The current national priorities are:! Reduction of nonpoint source pollutants in impaired watersheds(consistent with Total Maximum Daily Loads,3 or TMDLs), reduction ofgroundwater contamination, and reduction of pollution from pointsources;! Conservation of ground and surface water resources;! Reduction of emissions that contribute to air quality impairmentviolations of National Ambient Air Quality Standards;! Reduction of soil erosion and sedimentation from unacceptable levels onagricultural land; and! Promotion of at-risk species habitat conservation.NRCS also has identified state and local priority natural resource concerns thatsupport the national priorities.  These state and local priorities are used as guidelines bystates when selecting which producers will receive EQIP assistance.    How EQIP WorksProducers with eligible land can apply by submitting an EQIP plan that describes theconservation and environmental purposes that the producer will achieve by using one ormore USDA-approved conservation practices.  Eligible land includes cropland, rangeland,pasture, private non-industrial forest land, and other lands as determined by USDA.  Ofthe total authorized annual spending, 60% is allocated to livestock (both confined andgrazing) practices. USDA-approved conservation practices may involve structures, vegetation, or landmanagement.  Structural practices include the establishment, construction, or installationof measures designed for specific sites, such as animal waste management facilities,livestock water developments, and capping abandoned wells. Vegetative practices involveCRS-34  A limited resource producer or rancher has direct or indirect gross farm sales of not more than$100,000 in each of the previous two years (adjusted for inflation) and a total household incomeat or below the national poverty level for a family of four, or less than 50% of county medianhousehold income (determined using Commerce Department data), in the previous two years.A beginning farmer or rancher is an individual or entity who has farmed for less than 10 years.5  The percentage reduction was very similar before the 2002 farm bill, as the 1996 farm billauthorized funding at a total of $1.0 billion between FY1997 and FY2002, but appropriatorslimited it to a total of $897 million, reducing it by slightly more than 10% of the authorized total.introduction or modification of plantings, such as filter strips or trees.  Land managementpractices require site-specific management techniques and methods, such as nutrientmanagement, irrigation water management, or grazing management. NRCS partners with units of federal, state, and local governments, and interestgroups to coordinate information and resources that address both local and nationalpriorities.  In addition, producers can receive technical assistance from NRCS, state, local,or federal conservation offices, or approved third party providers to develop an EQIP planand, after approval, to implement it.  The local conservation district will review the planand then decide whether or not to select the plan for EQIP funding.  If approved, USDAwill provide cost-share payments or incentive payments to help the producer offset thecost of the practice.  Participants are eligible to receive cost-share payments for bothconstructing  structures and  implementing land management practices.  In addition, theymay be eligible to receive incentive payments from implementing certain higher-prioritypractices, such as developing comprehensive nutrient management plans.Contracts are in effect from one to ten years.  They are capped at $450,000 each,  andtotal payments to a person or entity over any six-year period is also limited to $450,000.Individuals or entities with an average annual adjusted gross income (AGI) of $2.5million for the three years prior to the contract period are ineligible unless they received75% of their AGI from farming, ranching, or forestry.  USDA will pay up to 75% of theprojected cost of each practice; however, limited resource producers and beginningfarmers and ranchers4 can receive up to 90% of the cost.  Initial payments are made theyear in which the contract is signed.EQIP Funding The 2002 farm bill (Section 2701) funded EQIP at a total of $6.1 billion inmandatory funds from the CCC through FY2007.  Of the $6.1 billion, $5.8 billion is tobe used to fund the cost-share portion of EQIP with the remainder for the new programsdiscussed in the next section.  The program, which had been authorized at $200 millionannually before FY2002, was to receive $400 million in FY2002, increasing up to $1.3billion in FY2007.  A main justification for this increase was to respond to the largebacklog of producer demand that had been documented during the 2002 farm bill debate.As a mandatory program, it would have automatically received the authorized amountsif Congress had not acted to reduce funding every year through annual appropriationslegislation.  Funding was authorized at a total of almost $4.4 billion between FY2003 andFY2006, but Congress limited it each year, providing a total of $3.952 billion.  Thisreduction is almost 10% below the authorized total.5  CRS-46 In FY2005, GSWC provided approximately $63 million in funding to producers (includes$51million congressionally limited funding and $12 million through another farm bill provisionthat requires a minimum total funding to each state in support of regional equity).  EQIP funding levels were amended by Section 1203 of the Deficit Reduction Act of2005 (P.L. 109-171), which limited funding to $1.27 billion in FY2007.  This legislationalso extended the authorization through FY2010, providing $1.27 billion in FY2008 andFY2009, and $1.3 billion in FY2010.     As shown in Table 1, the same three states have received the most EQIP funds eachyear.  The leading state is Texas, which has received approximately 9% of the total ineach of the past four years.  The next highest states have been California followed byColorado each year.  In FY2006,  the next four states receiving the largest amounts wereMinnesota ($32.0 million), Nebraska ($31.8 million), Montana ($31.7 million), andKansas ($30.8 million). Table 1. EQIP Allocations for the Three Largest Recipients, FY1998-FY2006($ million)State 1998 1999 2000 2001 2002 2003 2004 2005 2006NationalTotal 198.2 174.0 176.6 199.9 387.0 626.7 908.3 991.9 1,013.3Texas 16.3 13.4 13.3 15.2 28.7 57.7 78.6 90.0 91.3California 7.8 8.1 7.8 9.2 19.1 48.6 57.0 62.1 62.9Colorado 6.4 7.5 7.0 7.1 14.4 25.6 36.9 39.2 41.2Source: USDA, NRCS.New Programs under EQIPThree sub-programs, enacted in the 2002 farm bill, are implemented through EQIP.One of these, the Competitive Conservation Innovation Grants (CIG), is intended toleverage federal investment, stimulate innovative approaches to conservation, andaccelerate technology transfer in environmental protection and agricultural production.CIG is authorized from  FY2003 through FY2006 at an unspecified annual funding level.Grants must not exceed 50% of the project cost, with non-federal matching fundsprovided by the grantee.  NRCS established national, state, and Chesapeake Baywatershed components, and allocated up to $10 million, up to $5 million, and up to $5million, respectively, in FY2006.  For funding in earlier years, CIG was not implementedin FY2003, then awarded $14.3 million in FY2004 and $22.0 million in FY2005.A second sub-program, the Ground and Surface Water Conservation (GSWC)program, provides cost-share and incentive payments to producers where the assistancewill result in a net savings in  ground or surface water resources in the producer’sagricultural operation.  Funding is authorized as a separate amount in addition to EQIPat $25 million in FY2002, $45 million in FY2003, and $60 million annually from FY2004through FY2007.  Congress limited funding to $51 million in FY2004, FY2005, andFY2006.6  In the third sub-program, producers in the Klamath Basin in California andOregon continue to receive money from a separate and additional $50 millionCRS-57  In addition, the Administration has undertaken other initiatives, including pilot projects thatprovide market-based incentives for water quality and target small and limited resource farmers.authorization, to be provided “as soon as practicable”  to install conservation practicesand manage irrigation waters.7Selected Policy IssuesEQIP enjoys widespread support in the farm community and in Congress as itcontinues to be the major source of financial assistance to help producers implementconservation practices that address specific resource and environmental problems.  Majorissues that might be discussed in anticipation of the next farm bill include the backlog ofinterest that is not being met at current funding levels, assessing more precisely what isbeing accomplished through the EQIP program, and  using EQIP to address specific topicsor needs in specified locations.Applications BacklogThe number of applications for EQIP funding each year has been large enough thatNRCS has not been able to clear the backlog, even with much higher funding levels.  Asshow in Table 2, the gap between the supply of funds and the demand for them expandedrapidly in FY2002 and FY2003 after remaining fairly constant earlier.  In FY2004 andFY2005, the number of contracts continued to grow, and the backlog decreased to levelsnot experienced since FY2001.  Between FY1998 and FY2001, NRCS awarded contractsto approximately one-third of the applicants each year, but that declined to 22% inFY2002 and to only 15% in FY2003, then increased to 25% in FY2004.  NRCS awardedcontracts to more than half of the applicants in FY2005.  The backlog is still large evenwith the additional funding, and if the backlog was a major justification for higherfunding in the 2002 farm bill debate, it could be a strong argument in the next farm billdebate.  However, from FY2004 to FY2005, a very large number of backlog applicationswere not updated (for unknown reasons), and are therefore no longer considered.  As aresult, the total backlog declined by almost 103,000, even though only 50,000 applicationswere funded.  Table 2.  EQIP Applications and ContractsFiscal Year Total Applications Contracts (% ofapplications)Backlog Applications1998 54,816 19,758 (36.0%) 35,0581999 51,877 18,847 (36.3%) 33,0302000 53,961 16,249 (30.1%) 37,7122001 47,461 17,684 (37.3%) 29,7772002 90,312 19,817 (21.9%) 70,4952003 204,313 30,251 (14.8%) 174,0622004 181,807 46,413 (25.5%) 135,3942005 82,114 49,406 (60.2%) 32,708Source: NRCS, USDA.CRS-6While the backlog is large, detailed information is not currently available on thecharacteristics of those applications.  Of particular interest may be whether there are anyagricultural regions where a much smaller portion of applications are being funded,whether some practices are more likely to remain in the backlog than others, and whethersome applications stay in the backlog for a much longer time period than others.  Measuring EQIP AccomplishmentsNRCS can provide considerable information about EQIP contracts, including whichconservation practices are being installed, and their design and maintenance standards.However, relatively little is known about what is actually being accomplished throughEQIP contracts, or how enduring those accomplishments are after the contract ends.Among the questions that NRCS is trying to address for all its conservation activities,including EQIP, are how to evaluate performance, how to measure environmentalchanges, how to evaluate cost effectiveness, which methods to use to identifyenvironmental effects, and which types of data should be collected to measure output.NRCS has recently initiated a national review of its conservation accomplishments calledthe Conservation Effects Assessment Project (CEAP) to develop better answers to allthese questions.  While it has committed several million dollars annually to this effort,few results will be available before the next farm bill debate begins.Regarding EQIP specifically, NRCS has proposed to periodically review state-prepared reports to determine how the program is being delivered at the state and locallevel.  NRCS will require states to prepare reports describing EQIP implementation andaccomplishments tied to performance measures.  This information will be available to thepublic from the NRCS website.  Of particular interest may be livestock productionpractices, which receive 60% of total funding each year.  Policy makers may seek moreinformation about the development and adoption of Comprehensive Nutrient ManagementPlans, especially by Confined Animal Feeding Operations, referred to as CAFOs.  CAFOsare large livestock operations; the minimum number of animals varies with the type ofanimal.  Some have expressed concern that the effects of CAFOs on the environment andpublic health have not been adequately assessed, and may seek to address those concernsin the next farm bill. Targeting EQIPA small portion of EQIP funding is now targeted, as a result of provisions enactedin 2002, to the three sub-programs described  above.  One, the Klamath Basin, is targetedto a specific area, and the other two are targeted to specified topics, ground and surfacewater conservation, and innovative conservation technologies.  A question that may beaddressed in the farm bill debate is whether more sub-programs should be created, andif so, what topics will these programs address and how much money will be committedto them.  Interests may promote many different topics for such programs, but if funds forthese sub-programs are taken out of the general EQIP program, that may attractopposition, especially if EQIP funding remains at currently authorized levels, as is widelyanticipated as a preferred outcome in the current budget environment. 

Environmental Quality Incentives Program (EQIP): Status and Issues

1 The CCC is administered by a Board of Directors from agencies of the Department ofAgriculture.  It has no staff, and all work done on its behalf is performed by staff of agencieswithin USDA.  For EQIP, NRCS provides the staff.Congressional Research Service ˜ The Library of CongressCRS Report for CongressReceived through the CRS WebOrder Code RS22040February 3, 2005Environmental Quality Incentives Program(EQIP): Status and IssuesCarol CanadaTechnical Information SpecialistResources, Science, and Industry DivisionJeffrey ZinnSpecialist in Natural Resources PolicyResources, Science, and Industry DivisionSummaryThe Environmental Quality Incentives Program (EQIP) provides farmers withfinancial and technical assistance to plan and implement soil and water conservationpractices.  EQIP was enacted in 1996 and most recently amended by the Farm Securityand Rural Investment Act of 2002 (Section 2301 of P.L. 107-171).  It is a mandatoryspending program (i.e., not subject to annual appropriations), administered by theNatural Resources Conservation Service (NRCS).  EQIP is guaranteed a total of $6.1billion from FY2002 through FY2007 from the Commodity Credit Corporation (CCC),making it the largest conservation cost-sharing program.1  Issues about EQIP that the109th Congress may explore, especially in appropriations discussions or as it starts toconsider the next farm bill, include clearing the pending backlog of applications andmeasuring the program’s accomplishments. This report will be updated as circumstanceswarrant.BackgroundThe Environmental Quality Incentives Program (EQIP) is the principal source ofcost-sharing assistance for agricultural producers who wish to implement soil and waterconservation practices.  Participation is voluntary.  In addition to cost-sharing assistance,EQIP also provides participants with technical assistance and incentive payments.  EQIPwas created by the Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127, April 4, 1996) to replace four conservation cost-share programs repealed in the sameCRS-22 “Environmental Quality Incentives Program Final Rule,” Federal Register, vol. 68, no. 104,May 30, 2003, pp. 32337-32355.3 For more information on TMDLs, see CRS Report 97-831, Clean Water Act and TotalMaximum Daily Loads of Pollutants, by Claudia Copeland.law.  These were the Great Plains Conservation Program, the Agricultural ConservationProgram (ACP), the Water Quality Incentives Program, and the Colorado River BasinSalinity Control Program.  EQIP Program TodayEQIP is currently administered by the U.S. Department of Agriculture’s NaturalResources Conservation Service (NRCS) under a final rule, published in the May 30,2003, Federal Register.2  This rule implements amendments to the program enacted in theFarm Security and Rural Investment Act of 2002 (Section 2301 of P.L. 107-171, May 13,2002), commonly referred to as the 2002 farm bill.  EQIP’s legislative mandate is tooptimize environmental benefits.  NRCS implemented this by establishing nationalpriorities to reflect the nation’s most pressing natural resource needs and emphasizing off-site benefits to the environment.  NRCS considers these national priorities in allocatingfunds to states and establishing cost-share and incentive payment levels.  The nationalpriorities are:! Reduction of nonpoint source pollutants in impaired watersheds,(consistent with Total Maximum Daily Loads,3 or TMDLs), reduction ofgroundwater contamination, and conservation of ground and surfacewater resources;! Reduction of emissions that contribute to air quality impairmentviolations of National Ambient Air Quality Standards;! Reduction of soil erosion and sedimentation from unacceptable levels onagricultural land; and! Promotion of at-risk species habitat conservation.NRCS also has identified state and local priority natural resource concerns thatsupport the national priorities.  These state and local priorities are used as guidelines bystates when selecting which producers will receive EQIP assistance, since applicationscontinue to exceed available funds.    How EQIP WorksProducers with eligible land can apply by submitting an EQIP plan that describes theconservation and environmental purposes that the producer will achieve by using one ormore USDA-approved conservation practices.  Eligible land includes cropland, rangeland,pasture, private non-industrial forest land, and other farm or ranch lands as determinedby USDA.  Of the total authorized spending each year, 60% is allocated to livestock (bothconfined and grazing) practices. USDA-approved conservation practices are categorized as either structural or landmanagement practices.  Structural practices involve the establishment, construction, orCRS-34  A limited resource producer or rancher is a person with direct or indirect gross farm sales ofnot more than $100,000 in each of the previous two years (to be increased starting in FY2004 toadjust for inflation using the Prices Paid by Farmers Index as compiled by the NationalAgriculture Statistics Service) and a total household income at or below the national povertylevel for a family of four, or less than 50% of county median household income (to be determinedannually using Commerce Department data), in each of the previous two years.  A beginningfarmer or rancher is an individual or entity who has not operated a farm or ranch for more than10 years duration. installation of a site-specific measures, such as animal waste management facilities,livestock water developments, and capping abandoned wells.  Land management practicesrequire site-specific management techniques and methods, such as nutrient management,irrigation water management, and grazing management.  The goal of all practices is toconserve, protect from degradation, or improve soil, water, or related natural resourcesin the most cost-effective manner.  NRCS partners with units of federal, state, and local governments, and interestgroups, to coordinate information and resources that address both local and nationalpriorities.  In addition, the producer can receive technical assistance from NRCS, state,local, or federal conservation offices, or approved third party providers to develop anEQIP plan and, after approval, to implement it.  The local conservation district willreview the plan and then decide whether or not to select the plan for EQIP funding.  Ifapproved, USDA will provide cost-share payments or incentive payments to help theproducer offset the cost of the practice.  Participants are eligible to receive cost-sharepayments for both constructing  structures and  implementing land management practices.In addition, they may be eligible to receive incentive payments from implementing certainhigher-priority practices, such as developing comprehensive nutrient management plans.Contracts are in effect from one to ten years.  They are capped at $450,000 each,  andtotal payments per person or entity over the life of the 2002 farm bill (through FY2007),regardless of the number of farms or contracts, is also $450,000.   Individuals or entitieswith an average adjusted gross income (AGI) of $2.5 million for the three years prior tothe contract period are ineligible, unless they received 75% of their AGI from farming,ranching, or forestry.  USDA will pay up to 75% of the projected cost of each practice;however, limited resource producers and beginning farmers and ranchers4 can be paid upto 90% of the projected cost.  Initial payments are made the year in which the contract issigned.EQIP Funding The 2002 farm bill funded EQIP at a total of $6.1 billion in mandatory funds fromthe CCC through FY2007 (Section 2701).  Of the $6.1 billion, $5.8 billion is to be usedto fund the cost-share portion of EQIP.  The program, which had previously beenauthorized at $200 million annually, was to receive $400 million in FY2002, $700 millionin FY2003, $1 billion in FY2004, and $1.2 billion in FY2005.  The program would haveautomatically received these amounts if Congress had not acted to reduce funding throughannual appropriations legislation.  However, Congress has limited funded to less than theauthorized level each year.  Funding was authorized at a total of $3.1 billion betweenFY2002 and FY2005, but Congress limited it each year, providing a total of $2.296CRS-45  By contrast, the 1996 farm bill authorized funding at a total of $1.0 billion between FY1997and FY2002, but it was limited to a total of $897 million, almost 90% of the authorized total.billion.  This is a reduction that is less than 4% below the authorized total.5  For theremaining two years of this farm bill, $1.2 billion is provided in FY2006 and $1.3 billionis provided in FY2007.  Congress increased funding in response to the large backlog ofproducer demand that was documented during the 2002 farm bill debate.    As shown in Table 1, the same three states have received the most EQIP funds eachyear.  The leading state is Texas, which has received between 7.5% and 9% of the total.The higher portion has been allocated in each of the past two years.  The next higheststates have been California followed by Colorado each year.  Below these three largeststates, the amounts are very similar for several states.  In FY2004, for example, the nextfour states were Nebraska ($29.6 million), Minnesota ($29.4 million), Montana ($28.4million), and Kansas ($28.1 million). Table 1. EQIP Allocations for the Three Largest Recipients, FY1998-FY2004($ million)State 1998 1999 2000 2001 2002 2003 2004National, Total $198.2 $174.0 $176.6 $199.9 $387.0 $626.7 $908.3Texas $16.3 $13.4 $13.3 $15.2 $28.7 $57.7 $78.6California $7.8 $8.1 $7.8 $9.2 $19.1 $48.6 $57.0Colorado $6.4 $7.5 $7.0 $7.1 $14.4 $25.6 $36.9Source: USDA, NRCS.New Programs under EQIPTwo sub-programs, both enacted in the 2002 farm bill, are implemented throughEQIP.  Competitive Conservation Innovation Grants (CIG) are intended to leveragefederal investment, stimulate innovative approaches, and accelerate technology transferin environmental protection and agricultural production.  They are authorized in FY2003through FY2006, from funding provided for EQIP.  NRCS determines funding levels eachyear.  The grants must not exceed 50% of the project cost, with matching funds providedby state and local governments and private organizations.  The program operated underan interim final rule in FY2004 and is under a final rule in FY2005.  CIG was funded at$15 million for FY2004, and made awards totaling $14.3 million to 41 applicants.Applications are being solicited for FY2005.The Ground and Surface Water Conservation (GSWC) program provides cost-shareand incentive payments to producers where the assistance will result in a net savings inground or surface water resources in the producer’s agricultural operation.  Funding isauthorized as a separate amount in addition to EQIP at $25 million in FY2002, $45million in FY2003, and $60 million for each year from FY2004 to FY2007.  Congresslimited funding to $51 million in both FY2004 and FY2005.  In addition, producers in theKlamath Basin in California and Oregon continue to receive money from a separate andadditional $50 million authorization between FY2002 and FY2007 for ground and surfacewater conservation activities.CRS-5Selected Policy IssuesEQIP enjoys widespread support in the farm community and among thiscommunity’s supporters in Congress as it continues to be the major source of cost-sharingfunds to help producers implement conservation practices that address specific resourceand environmental problems.  Major issues that might be discussed in the 109th Congress,and in anticipation of the next farm bill, include the backlog of interest that is not beingmet at current funding levels, and assessing more precisely what is being accomplishedthrough the EQIP program.  In addition, future funding may become an issue ifreconciliation occurs with the FY2006 budget, leading to possible reductions in fundingfor mandatory programs in future years.Applications BacklogThe volume of applications for EQIP funding has presented a perennial challenge toNRCS.  While funding has grown, the number of applications has grown as well, and thegap between the supply of funds and the demand for them expanded rapidly in 2002 andagain in 2003 (data for 2004 will be released with the FY2006 budget request in February2005).  As shown in Table 2, the number of EQIP applications received remained fairlyconstant from FY1998 through FY2001, as did the number of contracts signed and thebacklog of pending applications.  In FY2002 and FY2003, the number of applications,contracts, and backlog all grew rapidly.  Between FY1998 and FY2001, NRCS awardedcontracts to approximately one-third of the applicants, but that declined to 22% inFY2002 and to only 15% in FY2003.  The result is that even with much more fundingthan in earlier years, the backlog is much larger than it has been, and if the backlog wasa major justification for higher funding in the 2002 farm bill debate, it may be an evenstronger argument in the next farm bill debate.While the backlog is large, more detailed information is not currently available onthe characteristics of the applications in that pool.  Of particular interest may be whetherthere are any agricultural regions where a much smaller portion of applications are beingfunded, whether some practices are more likely to remain in the backlog than others, andwhether some applications stay in the backlog for a much longer time period than others.Table 2.  Total Applications, Contracts, and Backlog Applicationsfor EQIPFiscal Year Total Applications Contracts (% ofapplications)Backlog Applications1998 54,816 19,758 (36.0%) 35,0581999 51,877 18,847(36.3%) 33,0302000 53,961 16,249(30.1%) 37,7122001 47,461 17,684(37.3%) 29,7772002 90,312 19,817(21.9%) 70,4952003 204,313 30,251(14.8%) 174,062Source: NRCS, USDA.CRS-6Measuring EQIP AccomplishmentsNRCS can provide considerable information about length of EQIP contracts, whichconservation practices are being installed, and their design and maintenance standards.However, relatively little is known about what is actually being accomplished throughEQIP contracts, or how enduring those accomplishments are after the contract ends.Among the questions that NRCS is trying to address for all its conservation activities,including EQIP, are how to evaluate performance, how to measure environmentalchanges, how to evaluate cost effectiveness, which methods to use to identifyenvironmental effects, and which types of data should be collected to measure output.NRCS has recently initiated a national review of its conservation accomplishments calledthe Conservation Effects Assessment Project (CEAP) to develop better answers to allthese questions.  While it has committed several million dollars annually to this effort,few results will be available before the next farm bill debate begins.Regarding EQIP specifically, NRCS has proposed to periodically review state-prepared reports to determine how the program is being delivered at the state and locallevel.  NRCS will require states to prepare reports describing EQIP implementation andaccomplishments tied to performance measures.  This information will be available to thepublic from the NRCS website.  Of particular interest may be livestock productionpractices, which receive 60% of total funding each year.  Policy makers may seek moreinformation about the development and adoption of Comprehensive Nutrient ManagementPlans, especially by Confined Animal Feeding Operations, referred to as CAFOs.  CAFOsare large livestock operations; the minimum number of animals varies with the type ofanimal.  Some have expressed concern that the effects of CAFOs on the environment andpublic health have not been adequately assessed, and may seek to address those concernsin the next farm bill. 

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Environmental Quality Incentives Program (EQIP): Status and Issues

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