Alternative Policy Designs to Help Farmers Select Profitable Conservation Practices

This work explores the potential cover crops and no-till adoption in the United States under four policy designs using a highly stylized economic model. Farmers who will adopt these conservation practices may receive cost-share payment from the federal conservation program and carbon payment from a voluntary private carbon initiative. To limit the number of acres receiving the cost-share payment from the Environmental Quality Incentives Program (EQIP), two types of limitations to EQIP participation (HEL and budget limits) and two different types of additionality requirements (financial and physical) are imposed in the simulated models. Four scenarios include four policy designs: (1) full additionality required; (2) physical additionality required and unrestricted EQIP payments; (3) physical additionality required and HEL-limited EQIP payments; and (4) physical additionality required and budget-limited EQIP payments under reverse auction in HEL-acres. The results show that the estimated adoption rates are highest in scenario 2 (cover crops: 34% of total cropland, no-till: 69%) and lowest in scenario 1 (cover crops: 2%, no-till: 25%). Imposing restrictions on EQIP participation can reduce the adoption of conservation practices to 6%–11% for cover crops and 28%–34% for no-till, but EQIP spending has become more cost-effective in terms of cost per ton of greenhouse gas emissions reduction.