Cost‐Effectiveness of the Conservation Reserve Program: Discussion

Abstract

Reserve Program (CRP). The CRP currently spends nearly $1.7 billion annually to withhold approximately 35 million acres of cropland from production. This is both a substantial budgetary outlay and a substantial amount of cropland. Minor inefficiencies at the contract level will be magnified into major inefficiencies at the program level. It is therefore essential to assess the performance of the program in order to promote efficient use of scarce public funds. The first article by Yang, Khanna, and Farnsworth makes excellent use of spatially explicit data and measures of dispersion commonly used in other fields of economics to compare the CRP and the Conservation Reserve Enhancement Program (CREP) in terms of their abilities to abate off-site sediment loadings in the Illinois River Basin. The authors find that the CRP, which includes a competitive bidding process, has lower costs per acre and per ton of abatement than does the CREP, which does not require competitive bidding but instead accepts qualified parcels on a firstcome basis. The authors propose and evaluate three alternative strategies for selecting land parcels into the CREP and conclude that any of these targeting rules could significantly improve the efficiency of the program. The second article by Feng, Kling, Kurkalova, Secchi, and Gassman uses spatially explicit data from the Upper Mississippi River Basin to investigate how a working land incentive for conservation tillage that competes with the CRP for the same parcels of land affects the performance of the CRP in terms of land enrolled, income transfers to farmers, and several measures of environmental quality. The authors demonstrate that, by removing the working land incentive and leaving the CRP incentive unchanged, the amount of land enrolled in the CRP increases by a factor of two. Alternatively, by removing the working land incentive and reallocating its budget to the CRP, the amount of land enrolled increases by a factor of five; however, the environmental benefits decrease substantially and the income transfer to farmers declines