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The Influence of Rising Commodity Prices on the Conservation Reserve Program

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  • Hellerstein, Daniel
  • Malcolm, Scott

Abstract

This report considers how increased commodity prices might influence enrollment in and benefits from the Conservation Reserve Program (CRP) using two complementary models: a likely-to-bid model that uses National Resources Inventory data to simulate offers to the general signup portion of the CRP and an opt-out model that simulates retention of current CRP contracts. Under several higher crop price scenarios, including one that incorporates 15 billion gallons of crop-based biofuels production, maintaining the CRP as currently configured will lead to significant expenditure increases. If constraints are placed on increasing rental rates, it might be possible to meet enrollment goals with moderate increases in CRP rental rates-but this will mean accepting lower average Environmental Benefits Index scores as landowners with profitable but environmentally sensitive lands choose not to enroll.

Suggested Citation

  • Hellerstein, Daniel & Malcolm, Scott, 2011. "The Influence of Rising Commodity Prices on the Conservation Reserve Program," Economic Research Report 262244, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersrr:262244
    DOI: 10.22004/ag.econ.262244
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    References listed on IDEAS

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    1. Ruben N. Lubowski & Michael J. Roberts, 2005. "How Cost-Effective Are Land Retirement Auctions? Estimating the Difference between Payments and Willingness to Accept in the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1239-1247.
    2. Ruben N. Lubowski & Andrew J. Plantinga & Robert N. Stavins, 2008. "What Drives Land-Use Change in the United States? A National Analysis of Landowner Decisions," Land Economics, University of Wisconsin Press, vol. 84(4), pages 529-550.
    3. Trostle, Ronald, 2008. "Fluctuating Food Commodity Prices: A Complex Issue With No Easy Answers," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, pages 1-8, November.
    4. Johansson, Robert & Peters, Mark & House, Robert, 2007. "Regional Environment and Agriculture Programming Model," Technical Bulletins 184314, United States Department of Agriculture, Economic Research Service.
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    Cited by:

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    2. Wang, Tong & Jin, Hailong & Kreuter, Urs & Teague, Richard, 2021. "Expanding grass-based agriculture on marginal land in the U.S. Great Plains: The role of management intensive grazing," Land Use Policy, Elsevier, vol. 104(C).
    3. Yasarer, Lindsey M.W. & Sinnathamby, Sumathy & Sturm, Belinda S.M., 2016. "Impacts of biofuel-based land-use change on water quality and sustainability in a Kansas watershed," Agricultural Water Management, Elsevier, vol. 175(C), pages 4-14.
    4. Nick Hanley & Simanti Banerjee & Gareth D. Lennox & Paul R. Armsworth, 2012. "How should we incentivize private landowners to ‘produce’ more biodiversity?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 28(1), pages 93-113, Spring.
    5. Osteen, Craig D. & Vasavada, Utpal, 2012. "Agricultural Resources and Environmental Indicators, 2012 Edition," Economic Information Bulletin 132048, United States Department of Agriculture, Economic Research Service.
    6. Assogba, Noel Perceval & Zhang, Daowei, 2022. "The conservation reserve program and timber prices in the southern United States," Forest Policy and Economics, Elsevier, vol. 140(C).
    7. Chakravarty, Shourish & Villoria, Nelson B., 2020. "Estimating the spatially heterogeneous elasticities of land supply to U.S. crop agriculture," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304446, Agricultural and Applied Economics Association.
    8. Brian Cornish & Ruiqing Miao & Madhu Khanna, 2022. "Impact of changes in Title II of the 2018 Farm Bill on the acreage and environmental benefits of Conservation Reserve Program," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(2), pages 1100-1122, June.
    9. LI, Liqing & Ando, Amy W. & Kirwan, Barrett E., 2017. "The Impact of Conservation Programs on Local Employment: A Case of Conservation Reserve Program," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259195, Agricultural and Applied Economics Association.
    10. Ruiqing Miao & Hongli Feng & David A. Hennessy & Xiaodong Du, 2014. "Assessing Cost-Effectiveness of the Conservation Reserve Program and its Interaction with Crop Insurance Subsidies," Center for Agricultural and Rural Development (CARD) Publications 14-wp553, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    11. Chad Lawley, 2014. "Changes in Implicit Prices of Prairie Pothole Habitat," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(2), pages 171-190, June.
    12. Peter Bridgewater & Mathieu Régnier & Roberto Cruz García, 2015. "Implementing SDG 15: Can large‐scale public programs help deliver biodiversity conservation, restoration and management, while assisting human development?," Natural Resources Forum, Blackwell Publishing, vol. 39(3-4), pages 214-223, August.

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