Agricultural Economic Report No. (AER-626) 40 pp

February 1990

The Conservation Reserve Program: An Economic Assessment

The Conservation Reserve Program (CRP) will boost net farm income and improve environmental quality over the life of the program (1986-99). These gains will come at the cost of somewhat higher food prices and Government administrative expenses, and potential downturns in farm input industries and other local economic activity tied to farming where enrollment is heavy. The authors estimated the net economic benefits of the program to range between $3.4 billion and $11.0 billion in present value, based on the effects covered in this report. Any estimate of the net Government expense of the CRP is highly dependent upon projected commodity market conditions and assumed levels of the acreage reduction program in the absence of the CRP. Prior to the 1988 drought, the authors estimated a small net Government expense. A more recent estimate made after the 1988 drought and with higher assumed acreage reduction levels in the absence of the CRP resulted in a significantly higher net Government expense.

Keywords: Conservation, soil erosion, water quality, Food Security Act of 1985, Conservation Reserve Program, CRP

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