GREEN PAYMENTS AS FORESHADOWED BY EQIP

Abstract

This paper addresses the potential of the Environmental Quality Incentives Program to become the first true green payment program, one which is not directly linked to farm income goals as all conservation programs have been in the past, even in contrast to the Conservation Reserve Program and the now obsolete Agricultural Conservation Program. EQIP is thus discussed as a new generation of conservation programs which are General Agreement on Tariffs and Trade-legal (no payments to farmers which may influence trade) and more targeted to actual agro-environmental problems than the traditional conservation programs. In the next sections, the paper raises two important questions: First, to what extent should green payments substitute for traditional commodity payments, as they are being phased out? If taking water quality problems into account, EQIP does not reach the geographic areas of the highest commodity program payments, although substitution was never intended and has inherent problems. The paper then looks at EQIP as a green payment program, discussing to what extent EQIP reflects the desired characteristics of a GATT-legal green payment program. Three such characteristics are discussed as hurdles for a successful EQIP implementation: a program has to be targeted, tailored and transparent. Additionally, rent-seeking by various private interests, lack of science-based data, agency and farmer inertia and the complexity of the program are all challenges which must be faced. The study concludes with a discussion of the future of green payments.