Economic Research Report No. (ERR-25) 82 pp

August 2006

Environmental Effects of Agricultural Land-Use Change: The Role of Economics and Policy

This report examines evidence on the relationship between agricultural land-use changes, soil productivity, and indicators of environmental sensitivity. If cropland that shifts in and out of production is less productive and more environmentally sensitive than other cropland, policy-induced changes in land use could have production effects that are smaller-and environmental impacts that are greater-than anticipated. To illustrate this possibility, this report examines environmental outcomes stemming from land-use conversion caused by two agricultural programs that others have identified as potentially having important influences on land use and environmental quality: Federal crop insurance subsidies and the Conservation Reserve Program (CRP), the Nation's largest cropland retirement program.

Keywords: Conservation Reserve Program (CRP), crop insurance, erosion, extensive margin, farm policy, imperiled species, land use, land-use change, land quality, nutrient loss, soil productivity

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