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Image: Natural Resources & Environment

Background

Conservation Spending Seeks To Improve Environmental Performance in Agriculture

Some farming practices can degrade natural resources and the environment. Sediment, nutrient, and pesticide runoff and leaching, for example, can impair water quality. Other practices can preserve and enhance our natural heritage and provide substantial benefits through careful management of agricultural land. Enhancing wildlife habitat on agricultural land—for example, by providing nesting material for migratory birds—can help increase wildlife populations. USDA's conservation programs help agricultural producers improve their environmental performance affecting soil quality, water quality, air quality, wildlife habitat, and greenhouse gas emissions.

A Portfolio of Incentive Programs

The USDA conservation effort relies mainly on voluntary incentive programs to address natural resource issues. Incentive programs can avoid the inherent difficulties in regulating geographically diffuse and difficult to monitor sources of pollution, and can minimize economic harm to farmers by offering a range of incentives and assistance programs. These programs account for more than 95 percent of all USDA conservation program spending:

  • The Conservation Reserve Program (CRP) generally provides 10-15 year contracts to remove land from agricultural production. Most of the land enrolled in the CRP was in crop production prior to CRP enrollment and is now planted to grass or trees. A large majority of CRP contracts enrolled whole fields or whole farms. Increasingly, however, CRP contracts fund high-priority, partial-field practices such as filter strips and grass waterways, rather than whole-field or whole-farm enrollments. Up to 2 million acres of grassland can also be enrolled in CRP if the landowner agrees to keep the land in grazing use rather than tilling it for crop production or converting it to any other use.
  • The Agricultural Conservation Easement Program (ACEP) provides long term or permanent easements for preservation of wetlands and the protection of agricultural land (cropland, grazing land, etc.) from commercial or residential development.
  • The Environmental Quality Incentives Program (EQIP) provides financial assistance to farmers who adopt or install conservation practices on land in agricultural production. Common practices include nutrient management, conservation tillage, field-edge filter strips, and fences to exclude livestock from streams. Sixty percent of program funds are targeted to livestock related practices and at least 5 percent are targeted to wildlife-related practices.
  • The Conservation Stewardship Program (CSP) supports ongoing and new conservation efforts for producers who meet stewardship requirements on working agricultural and forest lands. Farmers and ranchers must demonstrate a high level of stewardship to be eligible for the program and must agree to further improve environment performance over the life of the CSP contract (up to 10 years). Participants receive financial assistance for adopting new conservation practices and for stewardship, based on previously adopted practices and the ongoing maintenance of those practices. 
  • The Regional Conservation Partnership Program (RCPP) is designed to coordinate conservation program assistance with partners to solve problems on a regional or watershed scale. Financial assistance is coordinated through RCPP but provided to producers largely through “covered” programs: Environmental Quality Incentives Program, Conservation Stewardship Program, Agricultural Conservation Easement Program, and Healthy Forests Reserve Program. Up to 7 percent of the dollars or acres available under each of these programs will be allocated through RCPP.
  • Through Conservation Technical Assistance (CTA), USDA provides ongoing technical assistance to agricultural producers who seek to improve the environmental performance of their farms.

Compliance Leverages Conservation From Farm Support

Under highly erodible land conservation provisions (often referred to as “sodbuster”) farmers who crop highly erodible land must apply an approved soil conservation system or risk becoming ineligible for nearly all agriculture-related farm program benefits, including farm commodity programs, crop insurance premium subsidies, conservation programs, disaster assistance, farm loan programs, and other benefits. Under wetland conservation provisions (often referred to as "Swampbuster"), producers must refrain from draining wetlands or face the loss of farm program benefits.  

For producers who choose to till native sod that has not been previously tilled (whether or not it is highly erodible land), the "sodsaver" provision reduces crop insurance premium subsidies and limits the yield or revenue guarantee available during the first 4 years of crop production. Some limitations also apply to noninsured crop disaster assistance. Unlike sodbuster, these limitations apply only on the land that has been converted from native sod to crop production. The sodsaver provision applies only to native sod in Minnesota, Iowa, North Dakota, South Dakota, Montana, and Nebraska.

Conservation Spending To Level Off

After more than a decade of rapid grown in conservation spending, projections based on the Agricultural Act of 2014 (the 2014 Farm Act) indicate a leveling off in funding for conservation programs. Between 2014 and 2018, the Congressional Budget office (CBO) estimates mandatory conservation spending of $28 billion, about $200 million less than CBO’s projection of 2014-18 spending if the programs and provisions of the 2008 Farm Act had been extended. Although most conservation programs receive “mandatory” funding, the funding levels are not guaranteed and could be revised in future years.

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The new Farm Act, however, continues to emphasize working land conservation, largely through funding for EQIP and CSP.  Combined funding for these programs is projected to account for more than 50 percent of mandatory spending on major conservation programs during 2014-18. These programs (and their predecessors) accounted for just over 40 percent of spending during 2008-2013 and 32 percent during 2003-07.

Although CSP funding will be higher during 2014-18 than during 2008-13, a large share will go to servicing CSP contracts signed during 2008-12. Under the 2008 Farm Act, USDA was directed to enroll up to 12.789 million acres per year. The 5-year contracts can be extended for an additional 5 years, ensuring that extended contracts will be active until at least 2018. The 2014 Act authorizes enrollment of up to 10 million more acres each year during 2014-18. EQIP funding levels specified by the 2014 Farm Act also suggest an increase in funding for 2015-18, although actual funding could be less than specified in the Act.

Spending on land retirement and conservation easement programs is projected to decline. The 2014 Farm Act reduces the CRP acreage cap by 25 percent from 32 million acres under the 2008 Farm Act to 24 million acres by 2017. Rather than driving program change, however, the lower acreage limit largely reflects the ongoing decline in CRP acreage. Since 2007, CRP acreage has declined steadily from more than 36 million acres to less than 26 million acres at the end of 2013—a drop of about 30 percent. During the same period, the average per-acre CRP payment has increased by 16 percent (inflation-adjusted) and program expenditures have fallen by only about 10 percent in constant dollars. CRP is increasingly focused on high-priority practices (e.g., riparian buffers, field-edge filter strips, wetland restoration) and on State-Federal partnerships (though the Conservation Reserve Enhancement Program) that concentrate on specific problems such as improving water quality in a specific lake or river corridor. These “continuous signup” enrollments are more expensive per enrolled acre but are also believed to provide a higher level of environmental benefit per acre when compared to general signup enrollments that still account for more than 75 percent of CRP acres.

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Funding for easement programs is also likely to decline under the 2014 Farm Act. Projected funding for ACEP is roughly half of what was realized in predecessor programs (the Wetland Reserve Program, Farmland Protection Program, and the easement portion of the Grassland Reserve Program).

Last updated: Thursday, May 01, 2014

For more information contact: Roger Claassen