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The Role of Cost-Share Rates and Prices on the Size of Conservation Investments in EQIP

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  • Hand, Michael S.
  • Nickerson, Cynthia J.
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    Abstract

    Per-unit costs for conservation investments in the Environmental Quality Incentives Program (EQIP) are determined by market prices for conservation practices and payment cost-share rates. This study examines the relative importance of these factors in determining the size of the most common conservation investment in EQIP. Results suggest that per unit costs have a significant but inelastic impact on the size of conservation investment; as expected, higher per-unit costs are associated with smaller investments. This effect is largely due to variation in market prices of conservation practices for the majority of farmers. However, cost-share rates may play a role for some limited resource farmers.

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    File URL: http://purl.umn.edu/49257
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    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49257.

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    Date of creation: Apr 2009
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    Handle: RePEc:ags:aaea09:49257

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    Keywords: EQIP; cost share; beginning farmer; limited resource producer; conservation; Agricultural and Food Policy; Environmental Economics and Policy;

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    1. Lambert, Dayton M. & Sullivan, Patrick & Claassen, Roger, 2007. "Working Farm Participation and Acreage Enrollment in the Conservation Reserve Program," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(01), April.
    2. Cooper, Joseph C. & Keim, Russ, 1996. "Incentive payments to encourage farmer adoption of water quality protection practices," MPRA Paper 24779, University Library of Munich, Germany.
    3. Namatié Traoré & Réjean Landry & Nabil Amara, 1998. "On-Farm Adoption of Conservation Practices: The Role of Farm and Farmer Characteristics, Perceptions, and Health Hazards," Land Economics, University of Wisconsin Press, vol. 74(1), pages 114-127.
    4. Obubuafo, Joyce & Gillespie, Jeffrey M. & Paudel, Krishna P. & Kim, Seon-Ae, 2008. "Awareness of and Application to the Environmental Quality Incentives Program By Cow–Calf Producers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(01), April.
    5. Jeffrey Gillespie & Seon-Ae Kim & Krishna Paudel, 2007. "Why don't producers adopt best management practices? An analysis of the beef cattle industry," Agricultural Economics, International Association of Agricultural Economists, vol. 36(1), pages 89-102, 01.
    6. Okwudili, Onianwa & Wheelock, Gerald & Gyawali, Buddhi Raj & Gan, Jianbang & Dubois, Mark & Schelhas, John, 2004. "An analysis of the factors affecting participation behavior of limited resource farmers in agricultural cost-share programs in Alabama," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 22(1).
    7. Luanne Lohr & Timothy A. Park, 1995. "Utility-Consistent Discrete-Continuous Choices in Soil Conservation," Land Economics, University of Wisconsin Press, vol. 71(4), pages 474-490.
    8. Meredith J. Soule & Abebayehu Tegene & Keith D. Wiebe, 2000. "Land Tenure and the Adoption of Conservation Practices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 993-1005.
    9. JunJie Wu & Bruce A. Babcock, 1998. "The Choice of Tillage, Rotation, and Soil Testing Practices: Economic and Environmental Implications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 494-511.
    10. Lichtenberg, Erik, 2004. "Cost-Responsiveness of Conservation Practice Adoption: A Revealed Preference Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(03), December.
    11. Lori Lynch & Sabrina J. Lovell, 2003. "Combining Spatial and Survey Data to Explain Participation in Agricultural Land reservation Programs," Land Economics, University of Wisconsin Press, vol. 79(2), pages 259-276.
    12. Hendrix, Shannon & Wheelock, Gerald & Onianwa, Okwudili O., 1999. "Factors Affecting Conservation Practice Behavior Of Crp Participants In Alabama," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 17(2).
    13. Cooper, Joseph C., 1997. "Combining Actual And Contingent Behavior Data To Model Farmer Adoption Of Water Quality Protection Practices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(01), July.
    14. Hoppe, Robert A. & Korb, Penelope J. & O'Donoghue, Erik J. & Banker, David E., 2007. "Structure and Finances of U.S. Farms: Family Farm Report, 2007 Edition," Economic Information Bulletin 59032, United States Department of Agriculture, Economic Research Service.
    15. Lambert, Dayton M. & Sullivan, Patrick & Claassen, Roger & Foreman, Linda F., 2006. "Conservation-Compatible Practices and Programs: Who Participates?," Economic Research Report 7255, United States Department of Agriculture, Economic Research Service.
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