Slippage Or Spurious Correlation: An Analysis Of The Conservation Reserve Program
Previous research finds that some environmental benefits stemming from the Conservation Reserve Program (CRP) are offset by slippage: farmers simply plant more acreage to substitute for land that was idled. Our analysis shows that previous slippage estimates likely stem from spurious correlation. Most land retired under CRP is of lower-than-average quality. Due to the marginal economic viability of these lands they also are more likely to move both into and out of agricultural production. CRP enrollments therefore will be spatially correlated with non-cropland to cropland conversions even if no slippage is present. Using time-series rather than cross-sectional variation in CRP enrollments, we obtain new slippage estimates that control for land heterogeneity using fixed and random effects. Contrary to previous findings, we find little or no slippage in the form of new plantings of commodity crops. Moderate CRP-induced plantings take the form of new hay plantings that arise mostly from converted pastureland, but these conversions create little in the way of unintended environmental damages. Total commodity production is reduced by less than the proportion of acres idled because land retired is of lower-than-average quality and because it sometimes stood fallow or in hay before it was enrolled in CRP. Aside from its policy implications, our study demonstrates the crucial importance of accounting for spatial heterogeneity in empirical research.
|Date of creation:||2002|
|Contact details of provider:|| Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202|
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dana L. Hoag & William E. Foster & Bruce A. Babcock, 1993.
"Field-Level Measurement of Land Productivity and Program Slippage,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 75(1), pages 181-189.
- Hoag, Dana L. & Babcock, Bruce A. & Foster, William E., 1993. "Field-Level Measurements of Land Productivity and Program Slippage," Staff General Research Papers Archive 10586, Iowa State University, Department of Economics.
- Rausser, Gordon C. & Zilberman, David & Just, Richard E., 1984. "The Distributional Effects Of Land Controls In Agriculture," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 9(02), December.
- Torre Ugarte, Daniel de la & Sanford, Scott & Skinner, Robert A. & Westcott, Paul C. & Lin, William W., 2000.
"Supply Response Under The 1996 Farm Act And Implications For The U.S. Field Crops Sector,"
33568, United States Department of Agriculture, Economic Research Service.
- Lin, William W. & Westcott, Paul C. & Skinner, Robert & Sanford, Scott & De La Torre Ugarte, Daniel G., 2000. "Supply Response Under the 1996 Farm Act and Implications for the U.S. Field Crops Sector," Technical Bulletins 184369, United States Department of Agriculture, Economic Research Service.
- Love, H. Alan & Foster, William E., 1990. "Commodity Program Slippage Rates For Corn And Wheat," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(02), December.
- Deaton, Angus & Laroque, Guy, 1996. "Competitive Storage and Commodity Price Dynamics," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 896-923, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ags:aaea02:19714. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.