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Originally published Vol.
3, Issue 5 (November 2005)
A Multitude of Design Decisions Influence Conservation
Program Performance
Marca
Weinberg
Roger
Claassen
Designing a voluntary conservation
program requires several types of decision criteria
to encourage farmers to apply and to determine who
can participate in the program. These decisions
act as a winnowing process, starting with all farmers
and ranchers and resulting in a pool of program
participants. Eligibility requirements
determine which producers can apply, based on type
of farm (e.g., crops versus livestock), resource
concerns (e.g., erodible lands), or geographic locations.
Participation incentives (payment levels)
specify what actions (e.g., application of a conservation
practice) or levels of environmental performance
qualify for payments and how large the payments
will be. Payment rates can be fixed or set by bidding.
Enrollment screens determine which applicants
are accepted: They range from first-come, first
served to the use of a benefit-cost index to rank
applications by expected performance. Once these
design decisions are made, most actions by program
managers to meet program objectives are locked in
place.
A recent ERS report finds that
conservation program design features that promote
the highest level of environmental benefits per
program dollar include structuring the application
process for enrolling farm operators as a “request
for proposals,” including the benefits and
costs of enrollment; establishing a bidding process
for financial assistance; and using a benefit/cost
ranking to select program enrollees. ERS research
exploring specific aspects of program design highlights
the many tradeoffs involved:
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Achieving environmental and income objectives
with a single program involves tradeoffs in
terms of which goal is emphasized. Conservation
programs can support farm income but at a
potential cost in terms of environmental gains.
Commodity programs can be made “greener”
but likely will not fix every agri-environmental
problem or do so efficiently.
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“Targeting” conservation efforts
through eligibility requirements, participation
incentives, or enrollment screens can be used
to focus payments on fields, practices, or
specific resource concerns most likely to
generate the greatest environmental benefits.
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Bidding—a process in which farmers
compete in an auction for conservation payment
contracts—can reveal the costs of participating
and the benefits program applicants would
likely supply. Feeding those bids into benefit-cost
indices to enroll producers enhances the cost
effectiveness of conservation programs.
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Programs that retire land award payments
based on different actions than those focused
on working lands, resulting in different benefits
and tradeoffs. Land retirement generally provides
greater environmental benefits (per contract
acre) but at a higher cost than a working
land program, in which land remains in production.
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Similarly, paying farmers to adopt specific
conservation practices and paying for the
level of environmental performance are two
different approaches with distinct benefits.
Paying for performance is more cost effective
than paying for practices because program
incentives are directly linked to the environmental
indicator of interest. However, agri-environmental
performance is not easily observable, so performance-based
payments are difficult and costly to implement.
Practice-based payments that increase with
expected benefits may be a practical compromise.
Cost effectiveness, environmental
performance—the level and types of environmental
gains delivered by the program—and the distribution
of program benefits can vary widely according to
the package of decisions ultimately made about eligibility,
participation incentives, and enrollment screening.
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