Exploring the Influence of NRCS Cost-Share Programs on Cover Crop Adoption in the Midwest

This paper investigates the role of Natural Resource Conservation Service (NRCS) cost-share programs in promoting cover crop adoption. Cover crops offer multiple public ecological benefits, including reducing greenhouse gas emissions and improving water quality, along with private benefits to farmers from improvements in soil health, weed suppression, and a reduction in soil erosion. However, adoption of cover crops remains below the socially-optimal level due to high adoption costs and incomplete internalization of broader ecosystem services. The cost-share payments from NRCS allow farmers to bridge this gap between the public and private benefits of conservation practices. First, our theoretical model demonstrates that failing to separate voluntary adoption program payments into their cost-share proportion and per-acre cost components will yield incorrect conclusions regarding the impact of cost-share generosity on enrolled cover crop acreage. Next, using disaggregated NRCS program participation data and a panel fixed effects regression approach, we isolate the effect of cost-share generosity from per-acre payments and provide novel evidence on the role cost-share generosity plays in driving voluntary conservation program participation and cover crop adoption in agriculture. Lastly, we utilize remote-sensing data on total county-level cover crop and conservation tillage acreage to estimate complementarity models. These findings contribute to a comprehensive understanding of the factors influencing the adoption of cover crops and offer insights into the role of government incentives in increasing sustainable agricultural practices.