Rural Economic Effects Of The Conservation Reserve Program In North Dakota (Summary)

The Conservation Reserve Program (CRP), enacted in 1985, provides conservation benefits and agricultural supply control through voluntary, long-term retirement of crop land. Large-scale, long-term land retirement programs produce, in varying degrees, negative effects on those businesses and economic sectors that provide agricultural inputs and services. While the effects of the CRP on agriculture are well understood, economic assessments of the market-value of conservation benefits from the program accruing to rural economies remains largely undocumented. One of the conservation benefits of the program is wildlife habitat, which has bolstered upland bird, waterfowl, and big game populations. Growing wildlife populations have contributed to increased consumptive and non-consumptive wildlife-based recreation. This study addressed the net economic effects of decreased agricultural activity and increased recreational activity associated with the CRP in six rural areas of North Dakota from 1996 through 2000. The negative effects of the CRP on agricultural revenues were based on the level of economic activity that would have occurred in the absence of the program. The net change in revenues from CRP land returning to agricultural production in the six study areas was estimated at $76 million or about $56 per CRP-acre. However, returning CRP lands to agricultural production was estimated to lower commodity prices and reduce agricultural revenues on non-CRP lands by $25.9 million. The combined effect was estimated at $50.2 million annually or $37 per CRP-acre in the study areas. The CRP affects many types of outdoor recreation; however, hunting was identified as the most influenced type of recreation in North Dakota. Recreational impacts were determined by comparing pheasant, waterfowl, and deer hunter numbers before and after the CRP, assigning the relative role the CRP has played in the change in hunter numbers, allocating a percentage of the change in hunter numbers to each study area, and applying seasonal hunter expenditure patterns to the change in hunter numbers. Average annual CRP-related hunter expenditures in the six study areas were estimated at $12.8 million or $9.45 per CRP-acre. Overall, recreational revenues averaged 26 percent of the agricultural losses. The degree to which CRP-based hunting revenues in rural areas offset agricultural losses varied throughout the state. In several cases, hunting expenditures offset a substantial portion of the agricultural losses, while in other areas, the net economic loss from the program remains high. The net economic effects of the program in western and central North Dakota were the most favorable, whereas the effects were least favorable in eastern areas of the state. In North Dakota, the net economic effect of losses in agricultural revenues and gains in hunting-based recreational expenditures indicated that several areas of the state are not as economically burdened by the CRP as previous research has suggested.