Ex-ante effects of the 2018 Agricultural Improvement Act’s grassland initiative

The Grassland Conservation Initiative (GCI) was introduced under the United States 2018 Agricultural Improvement Act. The goal of the GCI is to conserve pasture and grassland. This study analyzes the ex-ante impacts of the GCI on crop returns and land-use acreage for Oklahoma farmers and ranchers. Oklahoma’s agricultural landscape is diverse. As with most agricultural policies focusing on land use, the distributional effects of GCI program will be conditional upon dominant land use types and grassland/pasture resources. Regions endowed with relatively more land resources in pasture and grassland are more likely to have more eligible acres, thereby potentially signaling to landowners in those regions opportunities to accrue land-holding rents. Land-use dynamics are estimated as a first-order Markov process. Not all regions benefit from this program. Findings suggest that aggregate net returns to cropland decrease. However, locations with above average pasture and grassland acreage experience gains in returns under certain policy assumptions. Counties experiencing gains from the GCI policy could experience higher returns to cattle and wheat compared to other counties with limited grassland and pasture acreage.