The U.S. Experience With Land Retirement for Natural Resource Conservation Ralph E. Heimlich Deputy Director for Analysis, Resource Economics Division, Economic Research Service, U.S.
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Transcript The U.S. Experience With Land Retirement for Natural Resource Conservation Ralph E. Heimlich Deputy Director for Analysis, Resource Economics Division, Economic Research Service, U.S.
The U.S. Experience With
Land Retirement for Natural
Resource Conservation
Ralph E. Heimlich
Deputy Director for Analysis, Resource Economics Division,
Economic Research Service, U.S. Department of Agriculture.
For presentation at the "Conference on Public Payment Schemes for Environmental Services,"
Beijing, Peoples Republic of China
April 22-23, 2002
Parallels Between U.S. and
China
Catastrophic floods
in 1927-37
Dust Bowl in Great
Plains
First conservation
programs in Dept. of
Interior
Long history of
conservation
programs
Catastrophic flood in
1998
Sandstorms blowing
across North and
West China
First conservation
programs in
Chinese State
Forest
Administration
U.S. Land Retirement
Programs
Conservation Reserve Program (CRP)
Conservation Reserve Enhancement
Program (CREP)
Wetland Reserve Program (WRP)
Acreage Reserve Program (ARP)
Conservation Compliance Provisions
Conservation Compliance
Sodbuster/Swampbuster
Million acres
420
History of U.S. Land Retirement
Programs, 1933-2001
Wetland Reserve
Program
Conservation Reserve
Program
Soil Bank
400
380
Agricultural
Conservation Program
Cropland Adjustment
Program
Acreage Reduction
Programs
Conservation
Adjustment Act Program
Cropland used for crops
360
340
320
19
37
19
42
19
47
19
52
19
57
19
62
19
67
19
72
19
77
19
82
19
87
19
92
19
97
YE
AR
300
How Does U.S. Land
Retirement Work?
Voluntary Program
Annual Rental Payment
Cost-share for cover establishment and
conservation practices (50-75 percent)
10-15 year contracts.
Eligibility
Cropland planted 2 of the last 5 years; or
Marginal pastureland enrolled in other programs.
Environmental
Requirements
Erosion Index (EI) of 8 or higher
Cropped wetland;
Devoted to highly beneficial environmental
practices (filter strips, riparian buffers, grass
waterways, shelter belts, wellhead protection
areas);
Subject to scour erosion;
Located in a national or state CRP
conservation priority area; or
Cropland associated with or surrounding noncropped wetlands.
Current CRP (January 2002)
33.7 million acres enrolled in CRP (10 % of
cropland)
1.9 million acres in partial-field enrollments
under the continuous signup or CREP
More than 560,000 contracts
More than 370,000 farmers (about 18 %)
$1.5 billion annual rental cost
Average rental cost per acre is $47
Conservation cover
60 percent of CRP acreage is planted to grasses
16 percent to trees or woody vegetation for wildlife
5 percent to wetland restoration
Lessons Learned From U.S.
Land Retirement
Targeting
Getting the Rent Right
Setting the Contract Term
Slippage
Targeting
1930’s-1960’s--None
Universal Soil Loss Equation (USLE)
and Wind Erosion Equation (WEE)-Highly erodible land
Onsite productivity v. Offsite impacts
Environmental Benefits Index (EBI)
EBI Evaluated for Each Parcel
Wildlife factor (0-100 points);
Wildlife cover (0-50 points)
Endangered species (0-15 points)
Proximity to water (0,5,10 points)
Adjacent protected areas (0,5,10 points)
Wildlife enhancement (0, 5 points)
Water Quality factor (0-100 points);
Location (0-30 points)
Groundwater (0Surface water quality (0Wetlands (0-10 points)
Erosion factor (0-100 points);
EBI (continued)
Enduring Benefits factor (0-50 points);
Air Quality factor (0-35 points);
Wind erosion impacts (0-25 points)
Wind erodible soils (0-5 points)
Air quality zones (0-5 points)
State or National Conservation Priority Area
factor (0-25 points);
Cost factor
Rental rate
Cost-sharing
Amount below MARR
Getting the Rent Right
Economic basis for all U.S. land
retirement programs is compensating
the farm operator for the opportunity
cost of using the land in crop
production.
Modern CRP bid/acceptance process.
Maximum Acceptable Rental Rates
(MARRs)
Soil Adjusted Rental Rates
Maximum Acceptable Rental Rates (MARRs)
Number of
parcels
Truncate the Distribution of CRP Bidders
Maximum Acceptable
Rental Rate (MARR)
Windfall
Excluded
Land rent
($)
Setting the Contract Term
Annual Set Aside (ARP)
10-15 year contracts (CRP, CREP)
Permanent easements (WRP)
Fee Title Purchase
CRP: Buying the Land Many
Times?
Was the same land retired many times?
2002, 1997, 1960 State acreage correlated at .99
61 Percent of 1985-95 reenrolled in 1996-2006
Total payments for CRP-like programs since
1933 is $33 billion in 1996 constant dollars.
1.1 billion acre-years of conservation.
Average real annual rental of $29.26 per
acre.
$975-$1,463 capitalized at 2-3 percent.
Greater than or equal to $887-$1,270 U.S.
average 1996-97 values.
2002
CA UT
AH
PE LIF
O
N
NS RN
IA
YL
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NE
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IA
W
YO
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AR RK
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CO R M
NN ON
EC T
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AR
IZ
O
NA
RT TEX
A
H
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CO KO
TA
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IN
SO
NE O
UT
SO
H
TA
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AK
O
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BR
AS
KA
IL
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NO
IS
NE IDA
HO
W
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EX
IC
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O
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KE
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TU
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Y
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HI
G
SO
W
AN
Y
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O
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IN
C
AR G
O
LI
NA
NO
million acres
Correlation of CRP Acreage by State, 1960,
1997, 2002
4.5
4
Correlation coefficient, 1997 and 1960 = .99468
3.5
Correlation coefficient, 2002 and 1997 = .999511
3
2.5
2
1.5
1
0.5
0
1997
1960
Slippage
Increased erosion or other
environmental impacts on new cropland
that offsets reductions on retired land
Conservation Compliance and
Sodbuster provisions act against
slippage
Some mechanism (compliance,
regulatory, taxes or fees) is needed to
prevent slippage
Costs and Benefits of CRP
To Landowners
90
$78.0
80
70
Cost-share on
practices
Soil productivity
billion $
60
50
40
20
Timber production
$26.5
30
$12.5
Net farm income
(including rental)
10
0
-10
Young and
Young and
Osborn, 1990 Osborn, 1990
(low)
(high)
USDA, 1996
Costs and Benefits of CRP
To Government
25
20
Rental payments
15
10
Technical assistance
billion $
5
0
-5
-10
Young and
Young and USDA, 1996
Osborn, 1990 Osborn, 1990
(low)
(high)
-15
Direct CCC savings
-20
-25
-30
Cost-share on
practices
Indirect price effects
($16.0)
($6.9)
($4.9)
Costs and Benefits of CRP
To Nonfarm Consumers
30
$14.0
20
10
billion $
0
-10
-20
-30
Young
and
Osborn,
1990
(low)
Young
and
Osborn,
1990
(high)
USDA,
1996
-50
-60
Wind erosion
Surface water quality
-40
($7.4)
Claassen
et al.
2001
(partial)
Domestic consumer
price increases
Wildlife habitat
($13.6)
($24.5)
Benefits Not Estimated
Benefits from erosion
and sediment
reduction
Picnicking, hiking, and
other recreation around
bays/estuaries
Commercial and
recreational fishing
Endangered species
protection
Recreation on coral reefs
Reduced dust for
households, industry,
viewing scenery
Benefits from wildlife
habitat restoration
Duck hunting
Big and small game
hunting
Wildlife viewing
Endangered species
protection
Ecosystem protection for
for common wildlife
Benefits Not Estimated
Benefits from wetland
preservation and
restoration
Waterfowl hunting
Endangered species
protection
Wetland ecosystems
existence
Wildlife viewing
Big and small game
hunting
Water quality
improvement
Flood damage control
Ground water recharge
Fishing
Other environmental
benefits
Carbon sequestation
Preservation of
indigenous plant and
animal species
Commercial and
recreational fishing
(reduced nutrient and
pesticide loadings to
surface water)
Health impacts of lower
nutrient and pesticide
loadings to ground and
surface water