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The Conservation Reserve Program: Economic Implications for
Rural America
Patrick Sullivan, Daniel Hellerstein, Leroy Hansen,Robert
Johansson, Steven Koenig, Ruben Lubowski,William McBride, David
McGranahan, Michael Roberts, Stephen Vogel, and Shawn Bucholtz
Agricultural Economic Report No. (AER-834), October
2004
The Conservation Reserve Program (CRP), begun in 1985, currently
retires approximately 34 million acres of highly erodible, and
other environmentally sensitive, land from crop production for
up to 15 years per enrolled acre. Land enrolled in the program
is planted to grasses, trees, and other cover, thereby reducing
erosion and water pollution, enhancing wildlife populations,
and providing other environmental benefits. These benefits,
as well as benefits to CRP participants and other crop farmers,
have made the program a recurring focus of farm program legislation.
From its beginning, however, the program's potential effect
on rural economic vitality has been a concern.
What Is the Issue?
Geographically concentrated enrollment in CRP can reduce demand
for farm inputs and agricultural marketing services. As a result,
it is presumed that the economies of farm communities in areas
with high proportions of farmland enrolled in CRP can be adversely
affected, and that consequential job losses could contribute
to ongoing population decline in such rural areas.
This report, initially prepared at the request of Congress,
addresses several questions about CRP's economic, social, and
land-use effects. Of particular interest are the effects of
CRP enrollment on:
• rural employment and businesses;
• rural population and beginning farmers; and
• opportunities for recreational activities (including
hunting and fishing).
What Did the Study Find?
This report finds that, in aggregate, the adverse impacts of
the CRP are generally small and fade over time, and that CRP
enrollment can have offsetting beneficial effects on rural economies.
High rates of CRP enrollment were associated with some loss
of jobs in rural counties between 1986 and 1992, but this negative
relationship did not persist through the 1990s. Farm-related
businesses, such as input suppliers and grain elevators, continued
to lose numbers throughout the 1990s, but nonfarm business expansions
eased the community impact. The regional impacts of CRP vary
widely and there are economic sectors, households, and communities
that benefit from high levels of CRP enrollment as well as those
that are adversely affected. The proportion of whole-farm enrollees
(participants who enroll the bulk of their land in the program)
relative to partial-farm enrollees (participants who enroll
only a fraction of their land) had little impact on employment
trends.
At the county level, rural populations were already declining
in the early 1980s, and post-1985 population trends were largely
unaffected by high levels of CRP enrollment. The level of total
CRP enrollment had little bearing on changes in the number of
beginning farmers, though whole-farm enrollment was negatively
and partial-farm enrollment was positively associated with beginning
farmer trends. We found no statistically significant evidence
that CRP participation encourages absentee ownership.
CRP has been shown to reduce soil erosion, improve surface
water quality, andhelp support wildlife populations. An overall
measure of the benefits attributable to CRP's effects on wildlife
and outdoor recreation is not available, but we estimate the
program contributes up to $300 million per year in increased
recreational expenditures each year.
How Was the Study Conducted?
ERS analysts employed a number of different datasets and models
in conducting this study. Trends in the geographic distribution
of CRP land and the characteristics of farm operators participating
in the CRP were analyzed using CRP contract data and survey
data on farm enterprises. Special attention was given to the
differences between whole-farm operators and partial-farm operators.
A literature review detailed some of the known environmental
and recreation impacts of the CRP, including impacts on soil
erosion, wildlife-based recreation, and water-based recreation.
Several approaches were used to investigate whether CRP enrollment
affected county-level employment, income, and population. Starting
with an econometric analysis of about 1,500 counties where CRP
might be important to the local economy, we developed a matched-pair
analysis which compares pre- and post-CRP socioeconomic trends
in about 200 "high-CRP" to (otherwise similar) "low-CRP"
counties. Special attention was given to the effects of whole-
versus partial-farm enrollment, the prevalence of absentee landlords,
and CRP's impact on farm-related businesses and beginning farmers.
This retrospective analysis is complemented by a separate simulation
of a hypothetical termination of the CRP, to predict effects
on farm businesses and agricultural production. Data from several
years of a national land-use survey are used to predict the
disposition of current CRP acreage (if the CRP were terminated),
and the resulting changes in agricultural production. Using
a model of the U.S. agricultural sector, simultaneous price
changes are also predicted. In addition, changes in recreational
expenditures are predicted, using data on recreational trips
and data on farm receipts for recreational access to CRP land.
Predicted changes in production, agricultural prices, and recreational
expenditures were then fed into a social accounting matrix multiplier
model, yielding predictions of changes in output, employment,
and income for several multistate regions under the hypothesized
scenario.
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