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Cac Versus Incentive-Based Instruments in Agriculture: The Case of the Conservation Reserve Program

  • Feng, Hongli
  • Kling, Catherine L.
  • Kurkalova, Lyubov A.
  • Secchi, Silvia

In this paper, we examine command-and-control (CAC) policies and market-based instruments (MBI) in the context of the Conservation Reserve Program (CRP). The CRP, an MBI in the form of subsidies, is by far the largest agro-environmental policy implemented to date. We compare the environmental performance of the CRP as implemented to a few counterfactual CAC polices using EPIC (Environmental Policy Integrated Climate), a bio-physical simulation model. In the context of multiple environmental indicators, no policy alternative emerges as a clear winner. The importance of the choice and design of CAC policies is emphasized. Keywords: command-and-control policy, Conservation Reserve Program, market-based instrument.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 10796.

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Date of creation: 01 Oct 2007
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Handle: RePEc:isu:genres:10796
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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  1. Claassen, Roger & Hansen, LeRoy T. & Peters, Mark & Breneman, Vincent E. & Weinberg, Marca & Cattaneo, Andrea & Feather, Peter & Gadsby, Dwight M. & Hellerstein, Daniel & Hopkins, Jeffrey W. & Johnsto, 2001. "Agri-Environmental Policy at the Crossroads: Guideposts on a Changing Landscape," Agricultural Economics Reports 33983, United States Department of Agriculture, Economic Research Service.
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  3. JunJie Wu, 2000. "Slippage Effects of the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 979-992.
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  6. Feather, Peter & Hellerstein, Daniel & Hansen, LeRoy T., 1999. "Economic Valuation of Environmental Benefits and the Targeting of Conservation Programs: The Case of the CRP," Agricultural Economics Reports 34027, United States Department of Agriculture, Economic Research Service.
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  10. Holderness, Clifford G, 1989. "The Assignment of Rights, Entry Effects, and the Allocation of Resources," The Journal of Legal Studies, University of Chicago Press, vol. 18(1), pages 181-89, January.
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  14. Babcock, Bruce A. & Lakshminarayan, P. G. & Wu, JunJie & Zilberman, David, 1996. "Economics of a Public Fund for Environmental Amenities (The)," Staff General Research Papers 1065, Iowa State University, Department of Economics.
  15. Babcock, Bruce A. & Lakshminarayan, P. G. & Wu, J. & Zilberman, David, 1997. "Targeting Tools for the Purchase of Environmental Amenities," Staff General Research Papers 5220, Iowa State University, Department of Economics.
  16. Andrew J. Plantinga & JunJie Wu, 2003. "Co-Benefits from Carbon Sequestration in Forests: Evaluating Reductions in Agricultural Externalities from an Afforestation Policy in Wisconsin," Land Economics, University of Wisconsin Press, vol. 79(1), pages 74-85.
  17. Smith, Vincent H. & Goodwin, Barry K., 2003. "An Ex Post Evaluation of the Conservation Reserve, Federal Crop Insurance, and Other Government Programs: Program Participation and Soil Erosion," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(02), August.
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