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Evaluating the Efficiency-Participation Tradeoff in Agricultural Conservation Programs: The Effect of Reverse Auctions, Spatial Targeting, and Higher Offered Payments

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Abstract

Using a survey of 430 farmer respondents in the Boone and North Raccoon River watersheds in Iowa, we examine the impacts of three program innovations-reverse auctions, spatially targeted payments, and higher offered payments-on agricultural water conservation program efficiency and participation by farmers. We combine farmer responses to a discrete choice experiment offering voluntary conservation contracts with township-level estimates of per-acre nitrogen reductions from each practice derived from the process-based ecohydrological Soil and Water Assessment Tool (SWAT) model. Using a random-parameters logit model, we show that both cost-reducing and benefit-boosting interventions reduce costs per projected pound of nitrogen removed from the watershed for each practice and thus are more cost-effective than the prevailing current cost-share programs. However, we find that these interventions can reduce participation by 30%-70%. Furthermore, we find cover crop contracts are far more cost-effective than no-till/strip-till split N application contracts.

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  • Gregory Howard & Wendong Zhang & Adriana Valcu-Lisman & Philip W. Gassman, 2022. "Evaluating the Efficiency-Participation Tradeoff in Agricultural Conservation Programs: The Effect of Reverse Auctions, Spatial Targeting, and Higher Offered Payments," Center for Agricultural and Rural Development (CARD) Publications 21-wp622, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:21-wp622
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    1. Wan, Xiaolan & Howard, Gregory & Zhang, Wendong, 2022. "Enrollment Restrictions and the Adoption of Conservation Practices in the U.S. Corn Belt," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322793, Agricultural and Applied Economics Association.
    2. Liu, Zhaoyang & Banerjee, Simanti & Cason, Timothy N. & Hanley, Nick & Liu, Qi & Xu, Jintao & Kontoleon, Andreas, 2023. "Spatially Coordinated Conservation Auctions: A Framed Field Experiment Focusing on Farmland Wildlife Conservation in China," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334572, Agricultural Economics Society - AES.

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