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Social Returns to Conservation: EQIP, Cover Crops, and Water Quality in the Midwest

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  • Yu, Shuo

Abstract

Agricultural runoff significantly contributes to nutrient water pollution, leading to harmful environmental and economic consequences. Cover cropping (CC), the practice of planting non-cash crops during off-seasons, has emerged as a promising conservation strategy to mitigate these impacts. Payment for ecosystem services programs, such as the USDA’s Environmental Quality Incentives Program (EQIP), have increasingly supported CC adoption through incentives. This study evaluates the social value of EQIP in enhancing water quality by examining its impact on CC adoption and the subsequent reduction in water pollution in the Midwest. Leveraging a unique 17-year, satellite-derived dataset on plot-level CC adoption and granular harmonized water quality metrics, we find that a one percentage point increase in upstream CC adoption reduces total nitrogen in surface water by 0.9%. An event-study analysis of EQIP’s Mississippi River Basin Initiative shows an initial 8.7 percentage point increase in CC adoption, with the impact diminishing over time. Overall, EQIP’s CC practices recover 48% of their implementation costs through reductions in nitrogen pollution under conservative assumptions, suggesting partial but significant economic returns via water quality improvements.

Suggested Citation

  • Yu, Shuo, 2025. "Social Returns to Conservation: EQIP, Cover Crops, and Water Quality in the Midwest," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360735, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360735
    DOI: 10.22004/ag.econ.360735
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    1. Meilin Ma & Carson Reeling & Megan N Hughes & Shalamar Armstrong & Richard Roth, 2023. "Comparison of conservation instruments under long-run yield uncertainty and farmer risk aversion," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(5), pages 1685-1714.
    2. Plastina, Alejandro & Liu, Fangge & Sawadgo, Wendiam & Miguez, Fernando E. & Carlson, Sarah & Marcillo, Guillermo, 2018. "Annual Net Returns to Cover Crops in Iowa," Journal of Applied Farm Economics, Purdue University, vol. 2(2).
    3. Pengfei Liu & Yu Wang & Wei Zhang, 2023. "The influence of the Environmental Quality Incentives Program on local water quality," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 27-51, January.
    4. Hsin‐Chieh Hsieh & Benjamin M. Gramig, 2024. "Estimating the impact of cover crop adoption on ambient nitrogen concentration in the upper Mississippi River drainage," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(2), pages 609-626, June.
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