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Beyond the Cropland: The Impact of Conservation Reserve Program on Local Agribusiness Industry

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  • Zhu, Yanlin
  • Miao, Ruiquing
  • Duke, Joshua

Abstract

The Conservation Reserve Program (CRP) is one of the most important agrienvironmental policies in the United States. Farmers and landowners retire their land into vegetation cover and receive rental payments paid by the government. Although the program generates well-documented ecosystem benefits, there are debates about its potential negative impact on the local economy. This paper studies the distributional impact of the CRP program on the local agribusiness sector. By leveraging a detailed county-level panel dataset of agricultural expenses, we use an instrumental variable (IV) approach to identify the causal impact of the CRP enrollment acreage and local agricultural expenses. We find that an additional 10% increase in the acreage of CRP enrollment reduces local agricultural expenses by about 0.175% on average. This effect is robust in most regions and expense categories. We also find regional variations in the response between the Southeast and the Midwest.

Suggested Citation

  • Zhu, Yanlin & Miao, Ruiquing & Duke, Joshua, 2025. "Beyond the Cropland: The Impact of Conservation Reserve Program on Local Agribusiness Industry," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360614, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360614
    DOI: 10.22004/ag.econ.360614
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    References listed on IDEAS

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    1. Marc F. Bellemare & Casey J. Wichman, 2020. "Elasticities and the Inverse Hyperbolic Sine Transformation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(1), pages 50-61, February.
    2. Adam, Brian D. & Hong, Seung Jee & Dicks, Michael R., 2004. "Effects of the Conservation Reserve Program on Elevator Merchandising Margins in Oklahoma," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 36(1), pages 83-96, April.
    3. Hung-Hao Chang & Dayton M. Lambert & Ashok K. Mishra, 2008. "Does participation in the conservation reserve program impact the economic well-being of farm households?," Agricultural Economics, International Association of Agricultural Economists, vol. 38(2), pages 201-212, March.
    4. Assogba, Noel Perceval & Zhang, Daowei, 2022. "The conservation reserve program and timber prices in the southern United States," Forest Policy and Economics, Elsevier, vol. 140(C).
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