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

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.