The Future of Environmental Compliance Incentives in U.S. Agriculture
by Roger Claassen
Economic Information Bulletin No. (EIB-94) 18 pp, March 2012
In recent years, direct payments—a type of farm commodity program payment—have made up a large share of Federal agriculture assistance that could be withheld from farmers who fail to comply with highly erodible land conservation (conservation compliance and sodbuster) or wetland conservation (swampbuster) provisions, known collectively as environmental compliance requirements. If direct payments are sharply reduced or eliminated to help reduce the Federal budget deficit, compliance incentives would be reduced on many farms, potentially increasing environmental quality problems. Some farmers will still be subject to compliance through existing Federal agricultural programs (e.g., conservation or disaster programs) or programs that may succeed direct payments. Making federally subsidized crop insurance subject to compliance could also make up some of the lost incentive to farmers.
Keywords: Direct payment, crop insurance, conservation compliance, sodbuster, swampbuster
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