Evaluating the effect of conservation policies on agricultural land use: A site-specific modeling approach

This study evaluates quantitatively the effect of three policies (payments for cropland retirement, fertilizer use taxes and payments for crop rotations) on agricultural land use in the upper Mississippi River basin. This is done by estimating two logit models of land use decisions using data from the 1982, 1987, 1992 and 1997 Natural Resource Inventories. The models predict farmers' crop choice, crop rotation and participation in the Conservation Reserve Program (CRP) at more than 48,000 Natural Resource Inventories sites under each of the three policies. Results suggest that an increase in the CRP rental rates would significantly increase the CRP acreage, but most of the acreage increase would come initially from less fertilizer intensive crops. In contrast, a fertilizer use tax would significantly reduce acreage planted to more fertilizer-intensive crops, and thus would likely be cost effective for reducing agricultural chemical use and pollution. Although an incentive payment for a corn-soybean rotation would raise acreage of this rotation and reduce the acreage of continuous corn, the acreage response is in general quite inelastic.