The Conservation Reserve Program: Economic Implications for Rural America
by
Patrick Sullivan,
Daniel Hellerstein,
LeRoy Hansen, Robert Johansson, Steven Koenig, Ruben N. Lubowski,
William McBride,
David McGranahan,
Stephen Vogel, Michael Roberts, and Shawn Bucholtz
Agricultural Economic Report No. (AER-834) 112 pp, 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.