United States

Department of

Agriculture

Economic

Research

Service

Agricultural

Economic

Report

Number 832

Environmental Compliance

in U.S. Agricultural Policy

Past Performance and 

Future Potential

Roger Claassen

Vince Breneman

Shawn Bucholtz

Andrea Cattaneo

Robert Johansson

Mitch Morehart
United States

Department

of Agriculture

www.ers.usda.gov

A Report from the Economic Research Service

June 2004

Agricultural

Economic

Report No.

832

Environmental Compliance

in U.S. Agricultural Policy

Past Performance and 

Future Potential

Roger Claassen, Vince Breneman, 

Shawn Bucholtz, Andrea Cattaneo, 

Robert Johansson, and Mitch Morehart

Abstract

Since 1985, U.S. agricultural producers have been required to practice soil

conservation on highly erodible cropland and conserve wetlands as a condition of farm program eligibility. This report discusses the general characteristics of compliance incentives, evaluates their effectiveness in reducing erosion

in the program’s current form, and explores the potential for expanding the

compliance approach to address nutrient runoff from crop production. While

soil erosion has, in fact, been reduced on land subject to Conservation

Compliance, erosion is also down on land not subject to Conservation

Compliance, indicating the influence of other factors. Analysis to isolate the

influence of Conservation Compliance incentives from other factors suggests

that about 25 percent of the decline in soil erosion between 1982 and 1997

can be attributed to Conservation Compliance. This report also finds that

compliance incentives have likely deterred conversion of noncropped highly

erodible land and wetland to cropland, and that a compliance approach could

be used effectively to address nutrient runoff from crop production.

Keywords: conservation compliance, Sodbuster, Swampbuster, conservation

policy, agri-environmental policy, nutrient management, buffer practices.

Acknowledgments

The authors gratefully acknowledge the helpful comments of Marca

Weinberg, Ralph Heimlich, Alex Barbarika, Jeanne Christie, Skip Hyberg,

Jeff Loser, Ed Rall, Marc Ribaudo, Kitty Smith, John Stierna, Keith Wiebe,

and Doug Young. We also thank Lou King for editorial assistance and

Cynthia Ray and Victor Phillips, Jr. for layout and cover design. 
Table of Contents

List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Compliance Mechanisms: A Primer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Current Compliance Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Compliance Objectives and Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Programs and Payments Subject to Compliance . . . . . . . . . . . . . . . . . . . 8

Analysis of Conservation Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Analysis of Swampbuster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Potential for Extending Compliance: Nutrient Management 

in Crop Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Nutrient Loss and Crop Producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Nutrient Runoff and Farm Program Participation . . . . . . . . . . . . . . . . . 27

Reducing Nutrient Runoff: Nutrient Management 

and Buffer Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Cost of Nutrient Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Cost of Buffer Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Appendix 1: Linking Environmental Indicators 

to Farm-Level Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Appendix 2: Methodology for Constructing Nutrient 

Loss Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Cover photograph: Tim McCabe, Natural Resources Conservation

Service/USDA.

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List of Tables

1. Conservation management systems and practices applied on

HEL cropland subject to compliance, 1997 . . . . . . . . . . . . . . . . . . . . . . . 7

2. Direct payments subject to Wetland and/or HEL

conservation provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3. Government loan programs subject to Wetland and/or HEL

conservation provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4. Erosion reduction on U.S. cropland between 1982 and 1997 . . . . . . . . 15

5. Average and 95th percentile EQIP incentive payments for 

selected conservation practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

6. Average EQIP incentive payments for selected conservation practices, 

by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

7. Average and 95th percentile EQIP incentive payments for 

nutrient management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Appendix tables

1. Acreage estimates using indicator surfaces and ARMS

versus acreage estimates directly from NRI . . . . . . . . . . . . . . . . . . . 45

2. Runoff curve table based on NRI land use . . . . . . . . . . . . . . . . . . . . . . 47

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List of Figures

1. Distribution of commodity program payments, 1998 . . . . . . . . . . . . . . 11

2. Distribution of highly erodible cropland subject to compliance by soil 

erosion rate before and after Conservation Compliance, 1997 . . . . . . . 12

3. Erosion reduction and Conservation Compliance, 1982-97 . . . . . . . . . 16

4. Distribution of commodity program payments and 

highly erodible cropland, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5. Highly erodible cropland acreage subject to Conservation Compliance 

on farms with and without farm program payments, 1997 . . . . . . . . . . 18

6. Highly erodible cropland on farms with and without 

payments, by ERS Farm Resource Region, 1997 . . . . . . . . . . . . . . . . . 18

7. Highly erodible cropland on farms with and without 

payments, by commodity specialization, 1997 . . . . . . . . . . . . . . . . . . . 18

8. ERS Farm Resource Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

9. Highly erodible cropland acreage by payment per acre, 1997 . . . . . . . 20

10. Percent change in excess erosion on highly erodible cropland on 

farms with and without payments, 1982-1997 . . . . . . . . . . . . . . . . . . . 20

11. Distribution of commodity program payments and wetlands, 1998 . . 23

12. Distribution of commodity program payments and wetlands adjacent 

to existing cropland, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

13. Distribution of commodity program payments and very high 

nitrogen-runoff potential, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

14. Distribution of commodity program payments and very high 

phosphorus-runoff potential, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

15. Distribution of commodity program payments and very high

nitrogen leaching potential, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

16. Percent of cropland acres on farms with and without payments, 

by potential nutrient loss to water, 1997 . . . . . . . . . . . . . . . . . . . . . . . 30

17. Average farm program payment per acre of cropland, by potential 

nutrient loss to water, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

18. Potential for overlap between existing compliance requirements 

and nutrient requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

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Summary

Farm commodity programs may have encouraged crop production on environmentally sensitive land in the 1970s and early 1980s. Although unintended, farm program incentives to expand production may have increased environmental damage associated with agricultural production and undercut the

effectiveness of conservation programs designed to mitigate that damage.

Compliance provisions, introduced in the Food Security Act (1985 Farm

Act), aim to counteract that influence. 

In essence, compliance provisions leverage farm program payments for the

environment; farmers who want to remain eligible for benefits from selected

Federal agricultural programs, including price support loans and income

support payments, must implement soil conservation systems on highly

erodible land (HEL) and refrain from draining wetlands. The question

addressed by this report is to what extent compliance provisions created sufficient incentives to motivate the types of behavioral shifts they were

designed to address. 

In fact, the annual rate of soil erosion on U.S. cropland declined by nearly

40 percent between 1982 and 1997. About a fourth of that decline can be

directly attributed to compliance. But that is only part of the story. A large

share of cropland erosion reduction occurred on land that was not subject to

compliance requirements. Non-HEL cropland accounted for 38 percent of

all cropland erosion reduction. This begs the question: How much erosion

reduction would have been realized without compliance requirements?

Reduced soil erosion on land not subject to compliance suggests that other

factors, such as technology, information, and markets, played an important

role in triggering large-scale erosion reduction. Conversely, compliance may

have acted as a catalyst for change, accelerating the adoption of farming

practices—such as conservation tillage—that can conserve soil and save

farmers money. 

Compliance mechanisms have clearly increased consistency between

income support and environmental programs. While consistency is an

important goal, this report focuses on the broader potential of the compliance mechanism as an agri-environmental policy instrument.

Compliance mechanisms may provide the best bang for the buck as a

deterrent to environmentally damaging actions such as draining wetlands or bringing new HEL into crop production. Compliance sanctions

are triggered only when a violation occurs. In contrast, using conservation

payments to achieve these same ends is likely to be difficult or expensive.

The difficulty is in deciding which wetlands or noncropped HEL are vulnerable enough to warrant conservation payments. If that is too difficult, policymakers could opt to subsidize protection of a significant share of these

environmentally sensitive lands—an expensive alternative, indeed. 

Compliance incentives have motivated farmers to reduce soil erosion on

highly erodible cropland. Between 1982 and 1987, excess erosion (any erosion in excess of the maximum level consistent with maintaining soil productivity) on highly erodible cropland fell by 331 million tons annually. Nearly

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90 percent of this reduction occurred on farms receiving government program

payments, and thus can be directly attributed to conservation compliance. 

Compliance incentives may deter producers from expanding crop production onto highly erodible land or wetland. Without compliance

requirements, between 7 million and 14 million acres of highly erodible

land or wetland that are not currently being farmed could be profitably converted to crop production, under favorable market conditions.

Existing government payments have the potential to leverage a broader

set of agricultural conservation and environmental gains. The majority

of cropland with potential for nutrient runoff is located on farms receiving

government program payments. Whether these payments are large enough

to spur farmers to address nutrient runoff depends on the methods available

for remediation and their cost.

Because they depend on payments from other programs for compliance

incentives, compliance mechanisms will be effective only on farms where

government payments exceed the cost of required conservation actions.

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Introduction

The 1985 Food Security Act (FSA) ushered in a new era of U.S. agrienvironmental policy. Although much attention has been focused on largescale, long-term land retirement through the Conservation Reserve Program

(CRP), the adoption of compliance mechanisms was an important agrienvironmental policy innovation. In general, compliance mechanisms

require farmers to meet some minimum standard of environmental protection on environmentally sensitive land as a condition of eligibility for

Federal farm program benefits—principally farm commodity program payments. Coupled with changes in the 1985 FSA that made commodity program participation more attractive to producers, compliance mechanisms

have come to play a significant role in U.S. agri-environmental policy. The

most recent farm bill, the Farm Security and Rural Investment Act of 2002,

retained compliance mechanisms with only minor technical revisions. 

At present, compliance mechanisms address soil conservation on highly

erodible land—provisions widely known as “Conservation Compliance” and

“Sodbuster”—and wetland conservation—a provision widely known as

“Swampbuster.” Conservation Compliance requires producers already cropping highly erodible land (HEL) to implement soil conservation plans or

risk losing their Federal farm program benefits (see box, “Soil Erodibility

and Soil Erosion”). Sodbuster places similar, albeit more stringent, requirements on producers who bring previously uncropped HEL into crop production. Under Swampbuster, producers who convert wetland for crop production can lose Federal farm program benefits. 

Compliance mechanisms are part of broader strategies for soil conservation

and wetland protection. CRP and Conservation Compliance/Sodbuster were

enacted in 1985 as part of an overall strategy to conserve soil. Farmers who

already cropped HEL could adopt required conservation systems or retire

land by enrolling it in the CRP, while Sodbuster was designed to deter farmers from bringing more HEL into crop production. Swampbuster was also

one of a number of policy changes designed to stem wetland loss in agriculture. The Tax Reform Act of 1986 eliminated tax breaks that encouraged

conversion of land to crop production, reducing the incentive to convert

both HEL and wetland to crop production, complementing the Sodbuster

and Swampbuster provisions of the 1985 FSA. The Wetland Reserve

Program (WRP), enacted in 1990, restores and protects previously drained

wetlands on agricultural land.

Since compliance mechanisms have taken effect, soil erosion on HEL cropland and wetland conversions for agricultural production have declined

sharply (Heimlich et al., 1998; Claassen et al., 2000; 2001). Nonetheless,

questions about the effectiveness of compliance mechanisms remain: What

proportion of overall cropland erosion reduction is actually due to

Conservation Compliance? Is Swampbuster actually constraining wetland

conversion for agricultural production? Will environmental benefits increase

if compliance is extended to address additional environmental problems? 

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In this report, we define compliance mechanisms, discuss their general characteristics, analyze the effectiveness of compliance mechanisms (with particular focus on the role of Conservation Compliance in reducing soil erosion on highly erodible cropland), and discuss the potential for expanding

compliance to address nutrient runoff and leaching from land in crop 

production.

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Soil Erodibility and Soil Erosion

Largely through compliance mechanisms, U.S. soil conservation policy

targets highly erodible land (HEL). HEL is defined as land with an erodibility

index (EI) of 8 or larger. The erodibility index is, in turn, defined by the ratio

of inherent erodibility to the soil loss tolerance. Inherent erodibility for a

given soil is the rate of erosion (tons per acre per year) that would occur on

land that was continuously clean-tilled throughout the year. The soil loss

tolerance is an estimate of the rate of soil erosion that can occur on a given

soil without significant long-term productivity loss. Thus, the erodibility

index captures both the propensity of a soil to erode and the potential for

damage from erosion. Actual soil erosion, however, reflects a complex interaction of climate, topography, soil characteristics, land use, and land management practices. Actual erosion is typically far less than a soil's inherent

erodibility due to ground cover (grass, trees, crops, crop residue) and conservation practices (e.g., terraces or windbreaks) installed by farmers and

landowners.

While soil erosion is difficult to measure under field conditions, physical

process models can be used to predict both inherent erodibility and the

average annual rate of soil erosion, given climate, topography, soils, land use,

and land management. The Universal Soil Loss Equation (USLE; Wischmeier

and Smith, 1978) and, more recently, the Revised Universal Soil Loss Equation (RUSLE; see http://www.sedlab.olemiss.edu/rusle/overview.html), and

the Wind Erosion Equation (WEE; Skidmore and Woodruff, 1968) have been

used widely in conservation planning and program implementation. 

Because average annual erosion rates can be estimated with and without

various conservation practices, the models have greatly facilitated policy

implementation. Farmers, working with conservation planners, can use physical process models to develop cost-effective conservation systems. These

models are used to implement conservation compliance and other USDA

conservation programs.
Compliance Mechanisms: A Primer

Compliance mechanisms require that agricultural producers undertake certain resource conservation activities as a condition of eligibility for selected

Federal agricultural programs, including commodity price and income support programs and voluntary conservation programs such as CRP, WRP, and

the Environmental Quality Incentives Program (EQIP). Producers who violate compliance requirements or who fail to take the required actions to

reduce existing environmental damage may become ineligible for all program benefits, not just on those acres where the violation has occurred.

Under Swampbuster, for example, program payments can be denied to producers who take action to convert wetland to crop production. Under

Conservation Compliance, producers who fail to act to reduce soil erosion

on HEL cropland can be similarly sanctioned. 

Compliance mechanisms can be viewed in two ways. As a method of policy

coordination, they can reduce unintended adverse environmental consequences of farm programs. As an agri-environmental policy tool, compliance can be used to further agri-environmental objectives. In this latter role,

compliance mechanisms have properties that set them apart from other agrienvironmental policy instruments—especially subsidies designed to encourage good environmental performance—making them useful in situations

where subsidies would be difficult or especially costly to use. 

Program coordination was a key motivation for adoption of compliance provisions in the 1985 Food Security Act (FSA). In the 1970s and early 1980s,

evidence suggested that farm commodity programs encouraged production

of relatively erosive crops on erosion-prone land, even as conservation programs attempted to mitigate these damages (Reichelderfer, 1985). High

commodity prices of the mid-1970s probably spurred the conversion of

highly erodible land from pasture or native grass to crop production—a

process commonly referred to as sodbusting—although evidence linking

this practice with farm commodity programs is limited (Watts et al., 1983;

Heimlich, 1986). Likewise, evidence showing that government payments

were an important incentive to swampbusting is quite limited (see Heimlich

et al., 1998, for a survey), even though the purpose of most wetland

drainage has, historically, been to allow or improve crop production (Dahl,

1990). 

Even if government payments are not a critical underlying motivation for

agricultural production on HEL or wetland, linking payments with compliance requirements can encourage improved environmental performance and

deter producers from expanding crop production onto environmentally sensitive land. Withholding payments on the entire farm, rather than only on

acres in violation of a compliance requirement, makes the potential sanction

quite serious for many farms.

Compliance is a unique policy tool that is not easily placed in traditional

categories of subsidy, tax, or regulation (Heimlich and Claassen, 1998a).

Compliance mechanisms are similar in some ways to both environmental

regulation and environmental taxes, but bear little resemblance to environmental subsidies. Like regulation, compliance mechanisms prescribe limits

on producer actions and provide for penalties (loss of farm program benefits

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in the case of noncompliance). Like taxes and fees, however, violation does

not imply illegal activity and maximum penalties are limited and known in

advance. Unlike an environmental subsidy program (e.g., EQIP1), producers

do not receive a benefit in exchange for taking an action that enhances (or is

designed to enhance) environmental performance. Instead, they are penalized, through withholding of benefits from otherwise unrelated programs,

when an environmental standard is not achieved. One could argue that programs with a compliance requirement actually seek a “bundle” of benefits

including environmental protection. However, there is no evidence to suggest that commodity program design is influenced by the potential for environmental benefits through compliance. Thus, the economic properties of

compliance mechanisms are quite different from those of a classic environmental subsidy program.

In general, compliance mechanisms are not subject to some of the problems

that can arise with the use of environmental subsidies. For example, poorly

designed subsidies for environmental improvement can encourage producers

to continue or expand crop production where it would not otherwise be

profitable, sometimes undercutting environmental gains (see Claassen et al.,

2001, for a full discussion). Moreover, compliance mechanisms do not

require subsidy payments in addition to those already in place through price

and income support or other programs.2 Note, however, that the effective

level of income support provided to complying producers is reduced by the

cost of complying with soil and wetland conservation requirements. These

farm commodity programs provide much of the underlying incentive for

producers to comply.

Compliance mechanisms may be particularly well suited to deter certain

environmentally damaging actions. For example, a hypothetical subsidy

program designed to prevent wetland drainage would require policymakers

to pay for protection of all wetlands on agricultural land—a potentially

expensive proposition—or decide which wetlands are sufficiently vulnerable

to agricultural conversion as to warrant protection—a potentially difficult

task (Heimlich and Claassen, 1998b). In contrast, Swampbuster penalties

are assessed when a violation occurs, eliminating the need for broad-based

subsidies or the need to anticipate the potential for a violation to occur on

any given wetland. No direct costs are imposed on producers, although there

may be an opportunity cost associated with production forgone on wetlands

that would otherwise have been converted to crop production. 

The success of compliance mechanisms depends on the commodity programs that provide most of the compliance incentive. Farm commodity programs have been in place for more than 65 years and their benefits have

been largely capitalized into the value of farmland (Goodwin et al., 2003;

Ryan et al., 2001; Barnard et al., 1997; Duffy et al., 1994).3 For many producers, the ability to purchase land or pay cash rent depends significantly on

government payments. In addition to introducing compliance mechanisms,

the 1985 FSA shifted the emphasis of commodity programs from price support to income support. With a market price support program, farmers could

benefit from farm programs without direct participation (sometimes referred

to as “free riding”). With income support payments, producers must participate to receive benefits. Consequently, many producers may feel that they

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1Through EQIP, the Federal

Government shares the cost of

installing or adopting conservation

practices that address key resource

concerns.

2The Government does bear some

cost for existing compliance programs.

USDA provides conservation planning

and technical assistance to producers

without charge. Effective monitoring

and enforcement by USDA can also be

costly. These costs, however, are not

specific to compliance mechanisms.

They would generally be incurred with

the implementation of other types of

agri-environmental programs as well.

3A compliance requirement, to the

extent it reduces a producer’s net

return to farm program participation,

may also reduce capitalization.
have little choice but to accept compliance requirements, even though,

strictly speaking, participation in these programs is voluntary and producers

could opt out to avoid compliance requirements. The 1996 Federal

Agriculture Improvement and Reform (FAIR) Act ended annual acreage setaside programs, reducing the cost of program participation and increasing

the compliance incentive.

Although working within the context of existing programs has some advantages over a subsidy mechanism, it also limits the potential effectiveness of

compliance mechanisms. Unlike an environmental subsidy program or regulation, the design of compliance mechanisms is, by definition, constrained

by the existence and design of other farm programs. In other words, the

scope and features of other farm programs largely determine how effective a

compliance mechanism can be. In designing a compliance mechanism, policymakers can determine: 

• the environmental objective(s); 

• minimum standards of environmental performance or 

practice implementation; 

• the programs and payments that are subject to the compliance sanction. 

But the effectiveness of compliance mechanisms will also depend on other

factors related to commodity programs and the agri-environmental problems

targeted by compliance. These include: 

• whether targeted environmental problems occur largely on farms that

participate in Federal farm programs subject to compliance; 

• the producer’s net benefit from farm program participation before the

compliance requirement; 

• the producer’s cost of meeting the compliance standard or requirement. 

In other words, the effectiveness of compliance mechanisms—relative to

other agri-environmental policy tools—depends largely on the size and spatial distribution of government payments relative to the spatial distribution

of targeted agri-environmental problems and the costs involved in mitigating those problems. 

Given the configuration of current farm programs, compliance mechanisms

have the potential to address many cropland-based conservation and environmental problems. Data from the Agricultural Resource Management

Survey (ARMS) show that farms receiving some type of government payment accounted for 86 percent of U.S. cropland. Other environmental

issues, such as livestock waste management and disposal problems, occur

more frequently on farms that do not participate in current farm programs

and, thus, are less likely candidates for compliance mechanisms. 

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Current Compliance Mechanisms

Current compliance mechanisms include Wetland Conservation provisions—

commonly known as Swampbuster—and Highly Erodible Land (HEL)

Conservation provisions, which include provisions commonly referred to as

Conservation Compliance and Sodbuster. Conservation Compliance generally refers to requirements that apply to HEL that was cropped before enactment of the 1985 Food Security Act (FSA). Sodbuster refers to compliance

requirements on HEL converted to crop production after 1985. 

Compliance Objectives and Standards

The objectives of the Highly Erodible Land Conservation provision are to

maintain soil productivity by maintaining soil depth and to reduce offsite

damages due to sediment loads, e.g., to reduce sediment delivered to water

bodies. 

After the 1985 FSA, compliance implementation efforts focused on reducing erosion to the soil loss tolerance (“T”) level. Developed largely in the

1940s and 1950s, T values were designed to represent the maximum rate of

soil erosion consistent with maintaining a given level of soil productivity

indefinitely. Before Conservation Compliance plans were devised and

implemented on farms, however, several factors prompted movement away

from the T standard. First, there were unresolved questions about the scientific validity of the T value. By the 1970s, the scientific basis for T values

was widely recognized as weak, yet efforts to adjust T values to reflect

higher erosion loss tolerance in some soils were unsuccessful (Cook, 1982).

Alternate methods of assessing the potential for erosion productivity damage had been developed (see Pierce et al.) but were not used by USDA in

establishing compliance requirements. Second, it became apparent that

reducing soil erosion to the T level would be costly on some soils. By 1987,

USDA had determined that reducing erosion to T or even 2T might be so

costly that crop production would no longer be profitable on a great deal of

highly erodible land (Canning, 1994). Finally, policymakers increasingly

recognized the offsite damage associated with sediment (which is unrelated

to T). Offsite damages can be substantial and are often larger than onsite

damages (see Ribaudo, 1989; Ribaudo et al., 1990; Feather et al., 1999). 

Ultimately, Conservation Compliance was implemented to consider both soil

erosion and the cost of erosion reduction, without a fixed erosion standard.

Where erosion could be reduced to the T level without making crop production unprofitable, producers were required to develop “basic” conservation

plans (which reduce erosion to T). Where reducing erosion to T was more

costly, producers were allowed to develop “alternative” conservation systems. Alternative conservation systems require the application of soil conservation practices that are technically and economically feasible in a given

local area and achieve “significant” erosion reduction. However, producers

are not required to reduce erosion to T or any other specific level. Some

alternative systems allowed erosion to remain at 2T or even higher levels.

This focus on local conditions and site-by-site development of conservation

plans allowed conservation systems to be tailored to climate, soils, cropping

patterns, and the producer’s management skills, leading to a broad array of

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approved conservation systems. USDA data show that more than 1,600 distinct conservation systems have been approved. Although 51 percent use

only conservation cropping sequences, conservation tillage, crop residue

use, or some combination of these three practices (table 1), this flexibility

probably resulted in more erosion reduction per dollar of cost than could

have been achieved using a more prescriptive approach that relied on a few

standard practices. 

The use of alternative conservation systems is limited to HEL that was

cropped during 1981-85. On HEL not previously cropped—i.e., sodbusted

land—producers must use conservation systems that hold erosion to T,

regardless of cost. In 1996, USDA tightened standards for alternative conservation systems developed after July 3, 1996. First, alternative systems

must reduce erosion by at least 75 percent of potential erosion4 and planned

erosion cannot exceed 2T (USDA-NRCS, 1996). An exception is made for

land returning to crop production from the Conservation Reserve Program

(CRP), where compliance requirements cannot exceed those in force when

the land entered the CRP. Second, for HEL not cropped during 1981-85,

conservation systems must hold soil erosion to no more than the soil loss

tolerance level (T) and prevent a “substantial increase” in erosion, defined

as 25 percent of potential erosion (USDA-NRCS, 1996).

Wetland Conservation provisions, widely known as Swampbuster, are

designed to protect wetland functions and values by preserving existing wetlands.5 Wetland values and functions include wildlife habitat, water purification, groundwater recharge, and mitigation of flood peaks. 

To comply with Swampbuster, producers must refrain from altering wetlands to make agricultural production possible. In keeping with the focus on

wetland functions and values, however, the 1996 Federal Agriculture

Improvement and Reform (FAIR) Act allows some flexibility to alter some

small areas of wetland if certain conditions are met. Producers are exempted

from the sanction if: 

• wetland conversion will have a minimal effect on overall wetland functions and values; 

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4Potential erosion is defined as

inherent erodibility as calculated by

the Universal Soil Loss Equation and

Wind Erosion Equation. 

5See regulations implementing

Swampbuster, 7 CFR 12, 61 FR

47019.

Table 1—Conservation management systems and practices applied on

HEL cropland subject to compliance, 1997

Item Percent of cultivated HEL

Conservation management systems

Conservation cropping/crop residue use 27.5

Conservation cropping/conservation tillage 10.8

Conservation cropping only 7.8

Crop residue use only 4.9

Total 51.0

Conservation practices*

Total with conservation cropping 81.1

Total with crop residue use 51.3

Total with conservation tillage 33.0

*Percentages sum to more than 100 because some conservation systems require the application of more than one practice.

Source: USDA, ERS, compiled from NRCS 1997 Status Review of Conservation Compliance

data.
• the wetland conversion project is fully mitigated through creation or

restoration of similar wetlands in the same general area; 

• the action is permitted under the Clean Water Act and the Natural

Resources Conservation Service (NRCS) determines that mitigation

requirements are adequate; or 

• a wetland is inadvertently altered without intent to violate the law and

the wetland is restored within 1 year.

Programs and Payments Subject to Compliance

Producers who violate compliance requirements may be denied benefits

from a wide range of Federal agricultural programs. Ongoing commodity

and disaster programs make up the large majority of direct payments subject

to compliance, accounting for 92 percent of these payments in fiscal year

(FY) 2000, 90 percent in FY 2001, and 79 percent in FY 2002 (table 2). The

2002 Farm Security and Rural Investment (FSRI) Act will extend similar

payments, in similar amounts, to a slightly broader group of producers (see

box, “Farm Programs in the 2002 Farm Act: Will Compliance Be

Affected?”). Conservation payments are also significant, including the

Conservation Reserve Program (CRP), Wetland Reserve Program (WRP),

Environmental Quality Incentives Program (EQIP), Emergency

Conservation Program (ECP), and the Watershed Protection and Flood

Prevention Program. Conservation program spending is authorized to

expand by 80 percent over the life of the 2002 FSRI Act.6 Federally subsidized crop insurance, which could be withheld under the original compliance provisions enacted in 1985, was removed from the list of programs

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6For more details, see the ERS

Farm Bill side-by-side comparison of

1996-2001 farm policy and the 2002

FSRI Act, http://www.ers.usda.gov/

Features/FarmBill/Titles/TitleIIConser

vation.htm

Table 2—Direct payments subject to Wetland and/or HEL conservation provisions

FY1997 FY1998 FY1999 FY2000 FY2001 FY2002

actual actual actual actual actual actual

Million $

Ongoing commodity programs

Production Flexibility Contract 6,350 5,719 5,476 5,057 4,105 3,968

Loan Deficiency 0 0 3,360 6,419 5,293 5,345

Other direct payments* 0 0 277 1 1,159 182

Subtotal--Commodity programs 6,350 5,719 9,113 11,477 10,557 9,495

Disaster programs

Market Loss Assistance 0 0 3,011 12,436 5,455 0

Noninsured Disaster 63 69 54 38 64 181

Disaster 48 15 2,264 1,452 3,146 254

Subtotal--Disaster 111 84 5,329 13,926 8,665 435

Conservation programs

Conservation Reserve Program 1,774 1,798 1,462 1,513 1,655 1,785

Environmental Quality Incentives Program 200 200 170 170 163 313

Wetland Reserve Program 119 219 123 165 182 263

Emergency Conservation Program 25 29 28 50 80 0

Watershed Protection and Flood Prevention 90 106 194 176 102 200

Subtotal--Conservation 2,208 2,352 1,977 2,074 2,182 2,561

Total 8,669 8,155 16,419 27,477 21,404 12,491

* Includes cotton user marketing payments and other direct payments.

Source: ERS, based on data from the Office of Budget and Program Analysis, USDA, the Highly Erodible Land and Wetland Conservation final

rule (7 CFR 12, 61 FR 47019), and communications with national program staff, Farm Service Agency, USDA.
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Farm Programs in the 2002 Farm Bill:

Will Compliance Be Affected?

Compliance requirements are continued in the 2002 Farm Security and Rural

Investment (FSRI) Act with only minor, technical changes. Changes in

commodity and conservation programs, however, may affect producers'

incentives to participate in Federal farm programs and, therefore, meet

compliance requirements.

Spending on commodity and conservation programs is projected to increase

by 80 percent (compared with continuing current programs), according to

Congressional Budget Office (CBO) estimates. However, much of the

increase in commodity program spending will replace ad hoc "market loss

assistance" payments provided to producers annually by Congress for the

1998-2001 seasons. Thus, a majority of new funds authorized directly in the

FSRI Act will go to producers of traditional program crops: corn, wheat,

cotton, rice, sorghum, oats, and barley. Ad hoc disaster assistance, which has

been authorized by Congress frequently in recent years, may be distributed

somewhat differently, but is likely to augment commodity program spending

mandated by the 2002 FSRI Act. 

A modest amount of new spending will be used to extend commodity

program payments to crops not previously eligible for these subsidies. For the

first time, producers of soybeans, other oilseeds, and peanuts will be eligible

for direct payments. Soybean and other oilseed producers were already

eligible for price support loans. Price support loans will also be extended to

producers of peanuts, wool, mohair, honey, small chickpeas, lentils, and dry

peas. Whether these program extensions will expand the reach of compliance

depends on (1) the acreage devoted to these crops and (2) whether farms

producing them are already subject to compliance through production of other

program crops. 

Analysis of Agricultural Resource Management Survey (ARMS) data in

conjunction with the National Resources Inventory (NRI) indicates that peanuts,

wool, mohair, honey, small chickpeas, lentils, and dry peas are produced by

more than 35,000 farms that encompass more than 8 million acres of highly

erodible cropland. Nearly all of these farms, however, already receive Federal

farm program payments based on other crops. We estimate that fewer than 5,000

farms encompassing less than 500,000 highly erodible cropland acres could

come under compliance requirements for the first time. Thus, program expansion

can be expected to have little, if any, effect on the reach or overall effectiveness

of conservation compliance (or other compliance mechanisms). 

Conservation program spending is also projected to increase by 80 percent.

Over the 6-year life of the 2002 FSRI Act, the CBO projects conservation

spending of $20.9 billion. The largest increases are for "working land"

conservation programs, i.e., programs that support good conservation practices on land in agricultural production. Key working land programs include

the Environmental Quality Incentives Program (EQIP) and the newly formulated Conservation Security Program (CSP). Authorized funding was also

increased for the Conservation Reserve Program (CRP), Wetland Reserve

Program (WRP), and a range of other conservation and environmental

programs. Because these programs are open to all producers—not just

producers of certain crops—and can address a wide range of agri-environmental problems, the extent to which expansion of these programs could

extend compliance requirements is unknown.
subject to compliance in the 1996 Act and is not currently subject to compliance requirements.

Eligibility for Federal agriculture-related loans or loan guarantees (e.g.,

price support loans and farm credit loans) can also be denied (table 3).

Unlike direct payments, the actual benefit received by producers is less than

that indicated by the program level. While the program level is the total

amount available for direct loans or loan guarantees, most direct loans and

loans covered by a guarantee are, in fact, repaid. Producer subsidies come in

the form of lower interest rates than would otherwise be available. For

example, direct government loans (e.g., price support loans) are often provided at rates lower than are commercially available. Other loan and loan

guarantee programs provide credit or assistance in obtaining credit for farmers who cannot afford commercially available credit. 

The effectiveness of compliance depends critically on the spatial distribution of payments relative to the environmental problems addressed through

compliance mechanisms. Figure 1 shows the spatial distribution of key

commodity program payments for the 1998 crop year: Production

Flexibility Contract (PFC) payments, Market Loss Assistance (MLA) payments, and Loan Deficiency Payments (LDPs).7 These payments are concentrated in the Corn Belt, the Plains States, and the Mississippi Delta—

areas that account for roughly two-thirds of U.S. cropland. Although the

total amount of these payments has varied from year to year, we assume that

the spatial distribution of these payments does not change significantly from

year to year because it depends largely on the spatial distribution of base

acres.8 Our assumption is consistent with the USDA baseline, which

assumes ongoing funding for income support tied to base acreage. Ad hoc

disaster payments, approved by Congress on an annual basis, could shift the

distribution of overall payments if a significant share of ad hoc payments

goes to farmers who are not clients of the traditional farm commodity programs. Recent history suggests, however, that these payments will augment,

not replace, more traditional farm income support payments. 

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7Loan Deficiency Payments and

Market Loss Assistance payments

associated with the 1998 crop were

made largely during FY 1999.

8Base acres are the land that is eligible for income support payments

through Federal farm commodity programs. Base acreage is determined by

historical plantings, and does not

depend on current crop acreages. 

Table 3—Government loan programs subject to Wetland and/or HEL

conservation provisions

FY1999 FY2000 FY2001

Million $

Commodity loan programs

Price support/Marketing asst. loans 8,358 9,669 8,567

Farm storage facility loans* 0 102 81

Total--Commodity loan programs 8,358 9,771 8,648

Farm credit loan programs

Farm operating loans 2,565 2,465 2,153

Farm ownership loans 944 1,106 1,016

Emergency loans 330 151 90

Total--Farm credit loan programs 3,839 3,722 3,259

Total--Loan programs 12,197 13,493 11,907

*Not subject to Wetland Conservation provisions.

Source: ERS, based on data from the Office of Budget and Program Analysis, USDA, the

Highly Erodible Land and Wetland Conservation final rule (7 CFR 12, 61 FR 47019), and communications with national program staff, Farm Service Agency, USDA.
Analysis of Conservation Compliance

According to USDA’s annual Conservation Compliance Status Review

(CSR), overall compliance with Conservation Compliance provisions is

high. Based on the 1997 CSR data (the year matching the most recent

National Resources Inventory, which we use extensively in the analysis that

follows), 95.9 percent of producers subject to compliance were actively

applying approved conservation systems. In more recent years, the CSR has

shown compliance rates of roughly 98 percent. The 1997 data also indicate

that the distribution of HEL cropland by erosion rate has shifted dramatically to lower erosion rates (fig. 2). In other words, the rate of soil erosion has

declined significantly on most HEL cropland acres subject to compliance. 

A recent General Accounting Office (GAO) study, however, identifies deficiencies in the CSR that cast some doubt on NRCS compliance estimates

(see box, “Enforcement: The Compliance Status Review”). GAO criticized

the CSR on the selection of the review sample, a lack of consistency and

clarity in the guidance provided to local offices, data handling and analysis,

failure to cite producers for significant deficiencies, and inadequate justification for waiver of penalties. 

We take an alternate approach, using existing datasets not created for the

express purpose of evaluating compliance mechanisms in an attempt to determine the overall effectiveness of compliance in reducing erosion on HEL

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Figure 1

Distribution of commodity program payments, 1998

Dollars/cropland acre

0 - 6.15

6.16 - 23.68

23.69 - 137.13 

No data

Source: Farm Service Agency.
cropland. It is clear that erosion has been reduced on land subject to compliance—even if the magnitude of those reductions is somewhat in doubt. Even

so, a broader look at soil erosion reduction provides context for evaluating the

overall role of Conservation Compliance in achieving those reductions.

Specifically, what is the extent of erosion reduction that can be directly attributed to Conservation Compliance? Has soil erosion been reduced more on

land subject to compliance than on land not subject to compliance? 

We analyze these questions using a two-step process. First, we analyze

overall erosion reduction using data from the 1997 and previous National

Resources Inventories (NRI). (See box, “Conservation Compliance and NRI

Point Data”). The NRI contains data on HEL cropland and changes in annual erosion over time but, with the exception of the Conservation Reserve

Program (CRP), do not specify whether a specific tract is enrolled in a government program. We use NRI data to estimate the amount of erosion reduction that could be directly attributed to compliance, if it occurred on land in

a farm receiving payments subject to compliance. In other words, we

believe that reduction in “excess” erosion (erosion exceeding T) on HEL

that was cropped in both 1982 and 1997, if it occurred on a farm receiving

payments subject to compliance, is the best estimate of erosion reduction

that could be directly attributed to Conservation Compliance. We exclude

erosion reduction below the T level on HEL cropland because it was not

required by Conservation Compliance. We note, however, that the discrete

nature of conservation practices may have resulted in the development of

Conservation Compliance systems with erosion rates of less than T.

Moreover, because compliance requirements were designed to allow HEL

cropland to remain in crop production, we exclude erosion reduction due to

land-use change. No erosion reduction would have been required on HEL

cropland with a pre-compliance erosion rate equal to or less than T. Erosion

reduction on non-HEL cropland is clearly not subject to compliance. 

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Figure 2

Distribution of highly erodible cropland subject to compliance 

by soil erosion rate before and after Conservation Compliance, 1997

Source: ERS analysis of 1997 Compliance Status Review.

0

5

10

15

20

25

30

0-2 4-6 8-10 12-14 16-18 20-22 24-26 28-30

After

Before

Percent of total HEL cropland

Tons per acre
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Enforcement: The Compliance Status Review

The Food Security Act Compliance Status Review (CSR) is USDA's primary

mechanism for enforcement of Highly Erodible Land Conservation (HELC)

and Wetland Conservation (WC) provisions. Each year, through the CSR,

USDA field staff assess HEL and wetland compliance on a sample of tracts

that are identified as part of farms receiving Federal farm program payments

subject to HELC or WC provisions. Some tracts are selected at random from

USDA’s Farm Service Agency (FSA) database while others are added by

State FSA offices because of potential for noncompliance. For example, tracts

on which temporary variances or waivers were previously granted must be

checked to establish a return to full compliance. 

In 2001, a total of 17,723 tracts were reviewed, including about 4.9 million

acres (from NRI we estimate that there are about 330 million acres of cropland and 104 million acres of HEL cropland). Of the total tracts, 13,552 were

identified through random sampling of the national database, while 4,171

were added by States. The CSR summary prepared by the Natural Resources

Conservation Service (NRCS) shows 98 percent of reviewed tracts and 98.9

percent of reviewed acres in compliance with HELC requirements. Of that

total, roughly 3 percent were in compliance, but were complying with a variance, condition, or exception. For example, variances can be granted for

personal hardship or unusual weather-related factors that made it impossible

to carry out the plan. Potential WC violations were found in 0.7 percent of

tracts reviewed. These results are consistent with previous compliance

reviews that showed HELC compliance of 97-98 percent. 

A recent General Accounting Office (GAO) report, Agricultural Conservation:

USDA Needs to Better Ensure Protection of Highly Erodible Croplands and

Wetlands, identified a variety of deficiencies in the CSR that "make questionable USDA's claim that 98 percent of the Nation's cropland tracts subject to

the conservation provisions are in compliance" (U.S. General Accounting

Office, 2003). GAO criticized USDA's CSR on a variety of issues, including

methods used to select the review sample, consistency and clarity of guidance

provided to local offices, data handling and analysis, failure to cite producers

for significant deficiencies, and inadequate justification for waiver of penalties.

For example, one issue raised by the GAO report is the inclusion in the CSR

of many tracts that do not require a compliance plan. In the 2001 CSR, 33

percent of the tracts reviewed did not require conservation plans. Often, these

tracts were permanent pasture or rangeland, yet these tracts are included as in

compliance with HELC and WC provisions. If these tracts are removed from

the CSR data, the overall compliance rate drops to 92.8 percent.

Deficiencies in the CSR identified by GAO do not necessarily imply that

HELC provisions have been ineffective in reducing soil erosion on highly

erodible cropland. Even if better enforcement could increase erosion reductions and associated environmental benefits, erosion reductions due to

compliance may have been significant. The uncertainty suggests the importance of improved evaluation of conservation compliance.
Second, we combine NRI data with data on farms whose operators responded to the 1997 Agricultural Resource Management Survey (ARMS).

Combining these data sets allows us to: 

• gauge the proportion of HEL cropland located on farms that receive payments subject to compliance; 

• estimate the distribution of payments over HEL cropland acres; and 

• calculate the reduction in excess erosion (erosion exceeding T) on HEL

that was cropped in both 1982 and 1997 on farms with and without government payments. 

Reduction in excess erosion on HEL cropped in 1982 and 1997 that is located on farms with payments is our estimate of erosion reduction that could

be directly attributed to compliance. Other factors, such as technical change,

may have also played a role. 

Erosion Reduction, 1982-1997

The 1985 FSA required development of Conservation Compliance plans by

1990 and full implementation by 1995. Between 1982 and 1997, annual

cropland erosion declined by 1.174 billion tons per year, a reduction of

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Compliance Requirements and NRI Point Data

The National Resources Inventory (NRI) is a sample of roughly 1.3 million

points of land throughout the United States. For each point, NRI provides a

wealth of data on land use and land condition. Typically, the NRI contains

data for three points of land within each primary sampling unit (PSU), which

is usually a 40-acre tract. Because the characteristics of land vary continuously, sampling at discrete points allows single-valued measures of land use,

soil type, topography, etc. When appropriately weighted, the point data can be

aggregated to produce estimates of land use, soil erosion, etc. 

Compliance requirements, however, are determined on a field-by-field basis.

To be subject to compliance, a field must be made up predominately of highly

erodible soils. If a field is designated as highly erodible land (HEL), conservation requirements apply to the entire field, not just the highly erodible

portion of the field. Field boundaries are carefully defined to make it difficult

for producers to redefine fields to avoid compliance requirements. 

Using point-based data from NRI to analyze a field-based program like

Conservation Compliance may lead to some estimation errors. Some NRI

points of HEL may fall in fields that are not predominately HEL and, therefore, not subject to compliance requirements. Any reduction in excess erosion

at these points could be incorrectly included in our estimate of soil erosion

reduction that could be attributed to Conservation Compliance. Likewise, NRI

points of non-HEL land may be located in fields that are predominately HEL

and, therefore, could be incorrectly excluded from our estimate of soil erosion

that can be attributed to Conservation Compliance.

Because the spatial relationship between field boundaries and NRI points is

unknown, it is impossible to accurately assess the level of error introduced by

this difference in program implementation and data collection. The errors

may, to some extent, offset one another because some points that should be

included are excluded and vice versa. 
nearly 40 percent (table 4). Average annual wind and water erosion declined

by 541.6 million tons and 632.8 million tons, respectively.

Erosion reductions that cannot be attributed directly to compliance account

for erosion reductions of 843.4 million tons per year. These reductions in

average annual erosion include 442.3 million tons on non-HEL cropland,

365 million tons due to land-use change (290 million tons due to CRP

enrollment of HEL cropland, and 74.9 million tons due to a net movement

of HEL land out of crop production9) and 36.2 million tons of “non-excess”

erosion on HEL cropland (fig. 3). 

Reduction in excess erosion on HEL cropped in 1982 and 1997 was 331 million tons, 28.2 percent of all erosion reduction and 42.8 percent of all erosion

reduction not associated with land retirement in CRP. More than 60 percent of

this erosion reduction, 207.7 million tons per year, was excess erosion due to

water while 123.3 million tons was excess erosion due to wind. The proportion

of these reductions that occurred on farms receiving government payments—

which we estimate in the following section—is our best estimate of erosion

reduction that could be directly attributed to Conservation Compliance. 

Some portion of other erosion reductions could be indirectly attributed to

Conservation Compliance. Erosion reduction on some non-HEL cropland

may be indirectly attributed to compliance if conservation systems were also

adopted on non-HEL cropland within the complying farm. For example,

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9While some HEL land was shifted

into crop production, more was shifted

out of crop production.

Table 4—Erosion reduction on U.S. cropland between 1982 and 1997

Cropland erosion, 1982 Cropland erosion, 1997 Change in erosion due to 

Cropland type Water Wind Totals Water Wind Totals Water Wind Totals

Million tons per year

HEL

Cropped in 1982 and 1997

Excess erosion1 432.9 396.8 829.7 225.2 273.5 498.7 -207.7 -123.3 -331.0

Non-excess erosion 147.6 140.8 288.4 134.9 117.3 252.2 -12.7 -23.5 -36.2

Land-use change

CRP2 114.8 175.2 290.0 0.0 0.0 0.0 -114.8 -175.2 -290.0

Non-CRP3 119.3 48.6 167.9 54.3 38.7 93.0 -65.0 -9.9 -74.9

Total, HEL 814.6 761.4 1,576.0 414.4 429.5 843.9 -400.2 -331.9 -732.1

Non-HEL

Cropped in 1982 and 1997 737.1 540.8 1,277.9 611.8 386.7 998.5 -125.3 -154.1 -279.4

Land-use change

CRP 62.1 47.8 109.9 0.0 0.0 0.0 -62.1 -47.8 -109.9

Non-CRP 74.7 22.0 96.7 29.5 14.2 43.7 -45.2 -7.8 -53.0

Total, non-HEL 873.9 610.6 1,484.5 641.3 400.9 1,042.2 -232.6 -209.7 -442.3

Total

Cropped in 1982 and 1997 1,317.6 1,078.4 2,396.0 971.9 777.5 1,749.4 -345.7 -300.9 -646.6

Land-use change

CRP 176.9 223.0 399.9 0.0 0.0 0.0 -176.9 -223.0 -399.9

Non-CRP 194.0 70.6 264.6 83.8 52.9 136.7 -110.2 -17.7 -127.9

Total, HEL and non-HEL 1,688.5 1,372.0 3,060.5 1,055.7 830.4 1,886.1 -632.8 -541.6 -1,174.4

1Excess erosion is equal to erosion less the soil loss tolerance or "T" value, or zero, whichever is larger.

2CRP erosion is minus 1982 erosion on land cropped in 1982 but in CRP in 1997.

3Non-CRP land-use change is 1997 erosion on land cropped in 1997 but not 1982, less 1982 erosion on land cropped in 1982 but not 1997.

Source: ERS analysis of NRI data
conservation tillage may have reduced costs for some producers, prompting

its use on non-HEL cropland as well. Even though compliance requirements

were designed to keep compliance costs low, some producers may have

opted to convert land to grass or forest to avoid these costs. The extent to

which these erosion reductions can be attributed to compliance is unknown. 

There is also evidence to suggest Sodbuster sanctions may have deterred

some producers from initiating crop production on HEL not previously

cropped. Unlike Conservation Compliance, Sodbuster requires that producers apply basic conservation systems—which achieve the T standard—on

previously uncropped land, regardless of cost. Claassen et al. (2000) show

that, depending on the level of commodity price expectations, between 7

and 14 million HEL acres that were not cropped in 1992 are located near

existing cropland and have inherent soil productivity high enough to make

crop production profitable in the absence of Sodbuster. 

Erosion Reduction and Farm Program Participation

Soil erosion reduction that could be directly attributed to Conservation

Compliance is the reduction in excess erosion on HEL that was cropped in

both 1982 and 1997 (331 million tons) and is located on farms that receive

government payments. A simple overlay of HEL cropland data with data on

government payments suggests that most HEL cropland is located in areas

with at least a moderate level of government payments (fig. 4). In this section,

we go beyond the simple overlay to estimate the number of HEL acres on

farms with and without government payments, as well as the reduction in

excess erosion on farms with and without payments.

To provide an estimate of the overlap between farms receiving government

payments and HEL cropland, we combined environmental and resource data

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Figure 3

Erosion reduction and Conservation Compliance, 1982-97

Million tons per year

0

200

400

600

800

1,000

1,200

1,400

1,174

All

erosion

reduction

Erosion

reduction

on HEL

Erosion

reduction on

HEL cropped 

in 1982

 and 1997

Reduction

in excess

erosion on 

HEL cropped in

1982 and 1997

Erosion 

reduction

that could be

attributed 

to compliance

Erosion reduction on

non-HEL cropland: 442

732

Erosion reduction 

due to land-use 

change: 365

367

Reduction in 

non-excess 

erosion: 36

Reduction

on farms

not receiving

payments: 36

Type of erosion reduction

Source: ERS analysis of 1997 NRI and 1997 ARMS data.

331 295
from the NRI with production and financial data (including data on government payments received) from ARMS (see Appendix 1). This analysis

defines government payments as farm commodity program payments, disaster payments, and conservation payments from the CRP, WRP, and EQIP.

These payments account for roughly 98 percent of direct payments potentially subject to compliance mechanisms. We use 1997 payments to match

available environmental data from the 1997 NRI. Although total payments

subject to compliance have been much higher in years since 1997, their spatial distribution has remained relatively constant over these years. 

We estimate that more than 83 percent of HEL cropland is located on farms

that receive farm commodity program, disaster, or conservation payments

(fig. 5). Of cropland that is highly erodible due to wind, 92 percent is located on farms receiving payments, while about 75 percent of cropland that is

highly erodible due to water is located on farms receiving payments. Results

vary across regions10 (fig. 6) and farm types (fig. 7). HEL cropland on

farms not receiving payments is estimated to account for more than 50 percent of HEL acreage in only two regions—the Eastern Uplands and

Southern Seaboard—regions with a high proportion of livestock-oriented

farms. In other regions, 65-95 percent of HEL cropland is estimated to be

located on farms that receive payments.

While the large majority of HEL cropland is located on farms receiving payments, payments are not distributed evenly across HEL acres. A large share of

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10For ERS Farm Resource Regions,

see figure 8.

Figure 4

Distribution of commodity program payments and highly erodible cropland, 1998

Dollars/cropland acre

0 - 6.15

6.16 - 23.68

23.69 - 137.13 

No data

Source: Farm Service Agency and NRI.

1 dot = 25,000 acres 

of HEL cropland
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Figure 5

Highly erodible cropland acreage subject to Conservation Compliance 

on farms receiving and not receiving farm program payments, 1997

0 5 10 15 20 25 30 35 40 45 50 55

Million acres

41.35

4.08

13.84

51.46

Source: ERS analysis of 1997 NRI and 1997 ARMS data.

Receiving payments

 HEL due to water

 HEL due to wind

Not receiving payments

 HEL due to water

 HEL due to wind

Figure 6

Highly erodible cropland on farms receiving and not receiving 

payments, by ERS Farm Resource Region, 1997

1.44

4.33

1.32

3.47

0.56

2.76

6.61

1.92

1.56

0.42

6.89

20.49

16.48

28.68

1.39

2.96

6.11

1.37

0 5 10 15 20 25 30

Million acres

Source: ERS analysis of 1997 NRI and 1997 ARMS data.

Receiving payments

Not receiving payments

Prairie Gateway

Mississippi Portal

Southern Seaboard

Eastern Uplands

Basin and Range

Fruitful Rim

Northern Crescent

Northern Great Plains

Heartland

Figure 7

Highly erodible cropland acres on farms receiving and not receiving 

payments, by commodity specialization, 1997

5.84

2.41

1.11

3.40

0.56

12.04

15.33

16.24

7.86

22.33

4.45

17.18

0 5 10 15 20 25

Million acres

Receiving payments

Not receiving payments

Source: ERS analysis of 1997 NRI and 1997 ARMS data.

 Wheat

Other livestock

Other cash grains

Corn and soybeans

Beef

Other crops
payments go to farms that have little or no HEL cropland, while many farms

with large acreage of HEL cropland receive relatively modest government payments. We estimate that roughly 28 percent of HEL cropland is located on

farms that received total government payments of less than $15 per HEL acre

in 1997, and nearly 50 percent is on farms that received less than $30 per HEL

acre (fig. 9). Note, once again, that payments have been higher in more recent

years (table 2). Low violation rates imply that most producers who received

only modest payments are fulfilling Compliance requirements. If true, the net

benefit of program participation to these producers exceeds the cost of compliance, whatever the level of payments per HEL acre.

We estimate that reduction in excess wind and water erosion on land

cropped in both 1982 and 1997 has been larger on farms receiving payments

than on farms not receiving payments (fig. 10). For wind erosion, the difference is large. Excess wind erosion declined by 30.7 percent on farms receiving payments while declining only 14.2 percent on farms not receiving payments. For water erosion, the difference is somewhat smaller. Excess water

erosion dropped by 46.7 percent on HEL cropland on farms receiving payments while the decrease was 40.5 percent on farms not receiving payments.

Overall, an erosion reduction of 294.6 million tons per year could be directly attributed to Conservation Compliance—about 89 percent of the 331 million tons of excess erosion reduction on HEL cropland cropped in 1982 and

1997 and 25 percent of all erosion reduction (fig. 3).

In summary, cropland erosion reduction between 1982 and 1997 was widespread. Erosion was reduced on land that is clearly not subject to compliance

(e.g., non-HEL cropland) as well as land that probably is. About 89 percent of

the reduction in excess erosion on HEL cropped in both 1982 and 1997—land

subject to compliance—occurred on farms receiving payments, which

accounted for roughly 83 percent of all HEL cropland. The difference was

much greater for wind-erodible soils than for water-erodible soils. Substantial

water quality, air quality, and soil productivity benefits are likely to have

resulted from these erosion reductions (Canning, 1994; Hyberg, 1997).

Compliance Costs

The above analysis suggests that many producers are in compliance even

though program benefits per acre of HEL cropland are modest for some

farms. This result is not surprising, because a flexible standard helped to

keep costs low. The result also suggests that practices that are widely used

in compliance systems are inexpensive. More than half of all conservation

systems are some combination of conservation tillage, conservation cropping, and seasonal crop residue management.

Conservation tillage systems leave at least 30 percent of the soil surface covered with crop residue at planting time. While conservation tillage systems

have the potential to reduce production costs, the evidence is mixed—labor,

fuel, and capital costs may decline while herbicide or fertilizer costs may

increase in many situations (Sandretto, 1997). Climate and soil conditions also

play a role. Soils that are not tilled or tilled less may warm up and dry out

more slowly than with conventional tillage. McBride (1999) notes that perbushel cost advantages to conservation tillage in corn may be greatest in the

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Figure 9

Highly erodible cropland acreage by payment per acre, 1997

28.73

21.97

13.78

10.37

16.13

0

5

10

15

20

25

30

35

<$15 $15-$30 $30-$45 $45-$75 >$75

Payment per HEL cropland acre

Million acres

Source: ERS analysis of 1997 NRI and 1997 ARMS data.

Figure 10

Percent change in excess erosion on highly erodible cropland on farms

receiving and not receiving payments, 1982-97

-40.53

-14.21

-46.72

-30.67

Source: ERS analysis of 1997 NRI and 1997 ARMS data.

0 -5 -10 -15 -20 -25 -30 -30 -40 -45 -50

Percent

 Receiving payments 

Wind erosion

 Not receiving payments

 Receiving payments

Water erosion

Not receiving payments

Basin and Range 

Prairie Gateway 

Southern Seaboar

Eastern d

Fruitful Rim 

Northern Great 

Plains

Heartland

Northern Crescent

Mississippi Portal

Fruitful Rim 

Fruitful Rim 

ERS Farm Resource Regions

Source: ERS.

Fruitful Rim 

Uplands

Figure 8
Plains States where reduced tillage can conserve moisture and help boost

yields. Wet, cold conditions can lead to emergence problems and slow earlyseason plant growth, which can reduce yields (Griffith et al., 1988). Seasonal

crop residue management differs from conservation tillage in that the seedbed

is clean-tilled, but the previous year’s crop residue is allowed to remain on the

surface longer to protect the soil. Tillage costs are not reduced, but the period

available for tillage is decreased, increasing the potential for delayed planting

due to weather. Conservation cropping may include production of less profitable crops or the cost of establishing cover crops for a portion of the season.

One source of national data on the potential cost of conservation practices is

the Environmental Quality Incentives Program (EQIP) database. EQIP payments do not directly represent estimates of cost. Payments indicate what

some producers were willing to accept to implement land management conservation practices. Since EQIP is a voluntary program, we assume that payments cover at least the producer’s cost, less any potential benefit that the

producer can capture (e.g., lower fertilizer costs under nutrient management). For structural practices, such as filter strips, the payment is a costshare (up to 75 percent in EQIP). For land management practices typical in

Conservation Compliance systems, the EQIP payment could exceed producer costs. Incentive payments are provided for up to 3 years to smooth the

transition to new production practices.

Nationally, the average incentive payment for producers adopting conservation cropping is $6.82 per acre annually for 3 years, and 95 percent of

enrolled producers received $10.00 or less per acre annually for 3 years.

Because incentive payments last only 3 years, we assume that the net present value of the payments covers the cost of practice adoption. Using a 4-

percent rate of discount, the net present value (NPV) of 3 years worth of the

average conservation cropping payment would be $18.92, while 95 percent

of producers would receive payments with a NPV of less than $27.75 (table

5). For conservation tillage (not including no-till), the average incentive is

$20.36 per acre (NPV over 3 years), while 95 percent of producers received

$33.40 or less. EQIP participants adopting crop residue use techniques

received $14.58 on average, and 95 percent received $27.75 or less. 

Average payments for specific conservation practices vary regionally (table

6). The average NPV of EQIP incentive payments for conservation cropping

ranges from $10.36 in the Prairie Gateway to $26.74 in the Southern

Seaboard. For conservation tillage, the average incentive payment varies

from $18.89 to $31.77, with the lowest payments in the Prairie Gateway

(where moisture conservation is an issue, so that the private benefits of

adopting conservation tillage may be highest) and the highest payments in

the Eastern Uplands. Finally, for crop residue use, average NPV of EQIP

payments range from $8.53 to $20.48.

The net present value of government payments that leverage Conservation

Compliance is generally larger than these payments for conservation practice adoption. Among farm program participants with HEL cropland, twothirds of HEL acres were on farms that received $15 or more in overall government payments per HEL acre in 1997 (fig. 9). The current farm bill

extends payments for 6 years. Discounted at 4 percent, the NPV of a $15-

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per-acre annual payment, made over a 6-year period, would be $78.75.

Moreover, producers may expect that income support payments will be

extended indefinitely. The NPV of a $15-per-acre annual payment over 20

years would be $204—more than enough to leverage the adoption of one or

more conservation practices. 

As expected, the cost of complying (as measured by willingness to accept

EQIP payments) is generally lower than the benefits of farm program participation (the value of program payments). Actual costs are unlikely to be higher

than producer willingness to accept but can be lower. These findings are consistent with a high rate of compliance. Low costs may also help explain the

fact that, for the period analyzed, erosion reduction was widespread, occurring

on land that is not subject to compliance, as well as land that is. 

Analysis of Swampbuster

Unlike highly erodible land conservation, wetland conservation provisions

interact significantly with both Federal and State regulatory requirements

and apply largely to land that is not currently in crop production. We focus

our analysis on the potential for wetland conversion without Swampbuster

sanctions and on the implication of changing Federal wetland regulations. 

Roughly 92 million acres of wetland are potentially subject to Swampbuster

(Claassen et al., 1998). Between 1986 and 1997, a total of 26,597 acres of

wetland were drained in violation of Swampbuster by 1,136 producers

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Table 6—Average EQIP incentive payments for selected conservation practices, by region

Average annual payment Net present value over 3 years

ERS Farm Conservation Conservation Residue mgmt. Conservation Conservation Residue mgmt.

Resource Region cropping tillage* (seasonal) cropping tillage* (seasonal)

Dollars per acre

Heartland 6.44 9.10 7.09 17.86 25.26 18.60

Northern Crescent 6.94 9.26 7.33 19.25 25.68 19.24

Northern Great Plains 5.13 10.88 4.98 14.23 30.18 13.08

Prairie Gateway 3.73 6.81 4.29 10.36 18.89 11.26

Eastern Uplands 8.84 11.45 7.56 24.53 31.77 19.85

Southern Seaboard 9.64 6.94 7.44 26.74 19.25 19.52

Fruitful Rim 7.16 8.32 7.80 19.87 23.10 20.48

Basin and Range 8.20 7.23 3.25 22.74 20.07 8.53

Mississippi Portal 5.35 10.28 4.91 14.86 28.54 12.87

*Practice 329b, "Mulch Till" in the NRCS Field Office Technical Guide.

Source: ERS analysis of EQIP database (NRCS).

Table 5—Average and 95th percentile EQIP incentive payments for selected conservation practices

3-year NPV of 3-year NPV of Number of

Conservation practice Average annual 95th percentile average annual 95th percentile contracts

--------------------------Dollars per acre--------------------------

Conservation cropping 6.82 10.00 18.92 27.75 3,386

No tillage 11.90 20.00 33.02 55.50 7,664

Conservation tillage* 7.34 12.04 20.36 33.40 3,523

Crop residue use 5.25 10.00 14.58 27.75 4,309

*Practice 329b, "Mulch Till" in the NRCS Field Office Technical Guide.

Source: ERS analysis of EQIP database (NRCS).
resulting in the loss of $12.3 million in Federal farm program benefits

(Claassen et al., 2000). In recent decades, wetland conversion for agricultural production has decreased steadily, a trend older than Swampbuster (1985)

or the Tax Reform Act of 1986. Conversion of wetland for crop production

averaged 593,000 acres per year in 1954-74 (Frayer et al., 1983), dropping

to 235,000 acres for 1974-84 (Dahl and Johnson, 1991), 31,000 acres per

year between 1982 and 1992, and 26,000 acres per year between 1992 and

1997 (USDA-NRCS, 2002a).

Evidence on the role of policy change in reducing wetland conversion for

agriculture is mixed (see Heimlich et al.,1998, for a full survey).

Swampbuster penalties will constrain wetland conversion only when: (1)

wetlands are located on farms that participate in Federal programs subject to

Swampbuster; (2) those wetlands could be profitably converted to crop production in the absence of Swampbuster; and (3) other policies (e.g., Section

404 of the Clean Water Act) are not applicable or not effective in deterring

wetland conversion.

First, Swampbuster will constrain wetland conversion only if wetlands are

located on farms that receive government payments. The spatial distribution

of government payments and wetland acreage subject to Swampbuster,

shown in figure 11, suggests that many wetlands are located in areas that

receive only modest payments per cropland acre. Many of these wetlands,

however, are located in remote areas and are unlikely to be converted to

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Figure 11

Distribution of commodity program payments and wetlands, 1998

Dollars/cropland acre

0 - 6.15

6.16 - 23.68

23.69 - 137.13 

No data

Source: Farm Service Agency and NRI data.

1 dot = 25,000 acres 

of wetlands
ing operation. We estimate that only 12.9 million wetland acres are directly

adjacent to existing cropland11 (fig. 12). As might be expected, these wetlands are much more likely to be located in areas that receive larger government payments, increasing the likelihood that these wetlands are, in fact,

located on or near farms that receive government payments. 

Of course, the fact that wetlands are adjacent to cropland does not imply

that they can be profitably converted to crop production. Some researchers

have questioned whether wetland conversion for crop production is profitable even without Swampbuster (Tolman, 1997; Kramer and Shabman,

1993). Profitability depends on a variety of factors, including crop prices

and production costs, soil productivity, and the feasibility and cost of land

clearing and drainage. Roughly half of all wetlands in the conterminous

United States in 1780 have already been drained (Dahl, 1990), and remaining wetlands may be more difficult or expensive to convert or may be less

productive once converted. 

Using more detailed data on the potential productivity of wetland soils,

other research suggests that there are wetlands that could be profitably converted to crops in the absence of policy constraints. Assuming that only

those wetlands that are adjacent to cropland are vulnerable to conversion,

Claassen et al. (2000) estimate that between 1.5 and 3.3 million acres of

wetlands have sufficiently high productivity to be converted to crop production, depending on producer price expectations. Also, profitability of crop

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Figure 12

Distribution of commodity program payments and wetlands adjacent to existing cropland, 1998

Dollars/cropland acre

0 - 6.15

6.16 - 23.68

23.69 - 137.13 

No data

Source: Farm Service Agency and NRI data.

1 dot = 25,000 acres 

of wetlands adjacent 

to cropland

11We used the habitat composition

variables in the NRI data to determine

whether a wetland point is near cropland. We considered NRI points classified as wetland to be “adjacent” to

cropland if some cropland occurred

along any one of four 500 foot-long

transects that extend NW, NE, SE, and

SW from the NRI point, as indicated

by the habitat composition variables.
production on the converted land is not the only consideration in the decision to drain wetland. Wetlands are sometimes drained to increase the efficiency of field operations on existing cropland by eliminating wetland areas

that producers must farm around. Roughly 5 million acres of wetland are

dry enough in some years for crop production. Although producers may

continue to farm these wetlands in their current condition without violating

Swampbuster, these wetlands may be particularly vulnerable to additional

drainage that would improve production and make field operation more 

efficient. 

Even if wetland conversion potential is, in fact, quite modest, these conversions could significantly undercut wetland restoration efforts. By the end of

fiscal year 2002, about 1.275 million acres had been restored through the

Wetlands Reserve Program (USDA-NRCS, 2002b). Another 1.6 million

wetland acres have been restored through the Conservation Reserve

Program (USDA-FSA, 2003). Thus, the total USDA wetland restoration

effort since 1990 is less than 3 million acres.

Finally, other laws and regulations that can stop or discourage wetland

drainage include Section 404 of the Clean Water Act (CWA) and numerous

State and local laws. However, these laws and regulations do not completely

protect all wetlands. Section 404 is limited in geographic scope following a

recent Supreme Court decision that excludes many isolated wetlands from

CWA regulation. In Solid Waste Agency of Northern Cook County (SWANCC)

v. United States Army Corps of Engineers (USACE), the Court ruled that

USACE could no longer claim jurisdiction over isolated, non-navigable,

intrastate ponds on grounds that they are used by economically important

species of birds migrating across State lines (National Wetlands Newsletter,

2001). Known as the migratory bird rule, this rationale has often been used to

assert CWA jurisdiction over isolated wetlands. The exact extent of wetlands

thus excluded from CWA regulation is yet to be determined and will probably

be decided by the courts. A patchwork of State and local regulations continues, but provides little or no wetland protection in many States (Kusler, 2001).

State wetland regulations exist in the Northeast, States surrounding the Great

Lakes, Atlantic Coast States in the South, and along the West Coast (Petrie et

al., 2001). Many heavily agricultural Midwestern and Plains States have little,

if any, State wetland regulation. In these areas, Swampbuster is the only

remaining policy disincentive to draining isolated wetlands.

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Potential for Extending Compliance: 

Nutrient Management in Crop Production

At present, compliance mechanisms are used only to encourage soil and

wetland conservation, although agricultural production can result in a wider

range of environmental damages (Claassen et al., 2001). In this section, we

look at the potential for extending compliance to a third agrienvironmental issue: reducing nutrient runoff and leaching from land in

crop production. 

Runoff and leaching from fertilizer application and animal manure are

major sources of remaining U.S. water quality problems (USEPA and

USDA, 1998). Nitrogen leaching into groundwater used for drinking can be

a health hazard to infants and may pose a cancer risk for adults. Excess

nutrients in surface water can lead to eutrophication, reducing the quality of

water for recreation and habitat. Eutrophication results from excess algae

growth which leads to high concentrations of bacteria (to break down dead

algae), which, in turn, leads to accumulation of bacterial waste and oxygen

depletion. Water becomes murky and develops an odor. In severe cases,

aquatic plants and fish are damaged by the lack of sunlight and oxygen. 

Nitrate nitrogen is highly soluble and is transported in both ground and surface water. In surface waters, nitrogen can be transported long distances,

polluting estuaries throughout the Nation (Bricker et al., 1999). Nitrogen

flowing into the Gulf of Mexico, largely from the Mississippi River, is the

suspected cause of a large zone of oxygen-depleted (hypoxic) waters

(Goolsby, 1999), creating a “dead zone” largely devoid of marine life.

Phosphorus is far less soluble and is most often transported to water along

with sediment (USGS, 1999). Excess phosphorus runoff from agriculture

may have contributed to outbreaks of waterborne pathogens, including pfiesteria piscicida (Mlot, 1997). 

To determine the potential of a compliance mechanism to mitigate runoff

and leaching of agricultural nutrients, we consider three key questions:

• To what extent is nutrient application—either commercial fertilizer or

manure—to land in crop production a source of nutrient runoff or 

leaching?

• To what extent do crop producers who have the greatest potential for

reducing nutrient runoff and leaching also participate in farm programs?

• Are government payments large enough to encourage broad adoption of

practices that could reduce nutrient runoff and leaching?

Nutrient Loss and Crop Producers

While a comprehensive solution to agricultural nutrient runoff and leaching

must involve crop and livestock producers, compliance incentives are largest

for farms with a significant area of land in program crop production. Crop producers—regardless of whether they are also livestock producers—will play a

central role in managing nutrients and reducing nutrient runoff from agriculture. Available evidence suggests that the application of commercial fertilizer

has, in the past, accounted for a significant share of agricultural nutrient runoff

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and leaching. Thus, crop producers can play a significant role in reducing

nutrient runoff and leaching, independent of livestock producers. Moreover, as

livestock production becomes increasingly concentrated on large, specialized

farms, an increasing proportion of livestock is raised on farms with too little

land to spread nutrients at agronomically sound rates (Kellogg et al., 2000),

indicating that management of livestock waste will necessarily involve crop

producers who do not raise livestock (Ribaudo et al., 2003).

In the past, commercial fertilizer has accounted for roughly 90 percent of nitrogen applied in agricultural production. Just over 12 million tons of nitrogen

fertilizer was applied in 1997 (Daberkow et al., 2000). Only 1.2 million tons of

nitrogen is recoverable from manure nutrients produced on U.S. farms with

confined livestock (Gollehon et al., 2001), although not all of these manure

nutrients are actually used in crop production.12 Evidence also suggests that

fertilizers are routinely applied in amounts that exceed crop needs. Roughly 70

percent of corn acres and 60 percent of winter wheat and cotton acres had

high13 excess nitrogen balances in 1995, while high excess phosphorus balances were estimated to exist on roughly 40 percent of corn, cotton, and wheat

acres (Daberkow et al., 2000). Nutrients applied in excess of or well in

advance of crop needs are particularly vulnerable to runoff and leaching. 

U.S. Geological Survey (USGS) estimates also indicate that, in the past,

commercial fertilizer has accounted for a significant share of nitrogen runoff

to surface water. Fertilizer application accounts, on average, for more than

48 percent of all nitrogen loads to surface water in areas where nitrogen

runoff per unit of land area is high (greater than 1,000 kg/km2 annually) and

more than 20 percent, on average, where runoff is low (less than 500

kg/km2 annually) (Smith et al., 1997). Livestock waste production is estimated to account for 15 and 12 percent of nitrogen reaching surface water

in high- and low-runoff areas, respectively. Where nitrogen loads are low,

runoff from nonagricultural land is a relatively important source of nitrogen

loading (Smith et al., 1997).

Phosphorus runoff to surface water is much more likely to be the result of livestock waste or nonagricultural, nonpoint sources. In areas where USGS

researchers estimate that phosphorus surface-water concentrations exceed the

Environmental Protection Agency (EPA) suggested water quality goal of 0.1

mg/L, fertilizer is estimated to account, on average, for 21 percent of phosphorus loading while livestock waste and nonagricultural land are estimated to

account for 38 and 33 percent, respectively (Smith et al., 1997). As noted

above, however, many cropland acres carry excess phosphorus balances. Thus,

non-waste phosphorus management on cropland may still be important to

reducing phosphorus damage to surface water, particularly in areas where livestock production is less prevalent and commercial phosphorus fertilizer is

applied. 

Nutrient Runoff and Farm Program Participation

While nutrient application in crop production contributes significantly to the

runoff and leaching of nutrients to water, the potential for nutrient loss may

vary across producers. If so, to what extent do producers who have significant potential for nutrient loss also participate in farm programs? To gauge

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12While almost all manure is eventually disposed of through landspreading, it is not clear that all recoverable

manure nutrients are applied to agricultural land as fertilizer. Increasing

concentration in livestock production

has resulted in concentrations of animal waste that often exceed the nutrient needs of crops grown on the farm.

Manure may be stockpiled for extended periods, in which case much of the

recoverable nutrient is lost to the environment. In some cases, transportation

costs preclude full utilization of livestock manure as fertilizer (Gollehon et

al., 2001; Ribaudo et al., 2003). 

13A “high” excess nutrient balance

is defined as available nutrients

exceeding crop nutrient use by 25 

percent or more.
runoff potential, we use indices for potential nitrogen runoff, phosphorus

runoff, and nitrogen leaching to groundwater developed by Lemunyon and

Gilbert (1993), Sharpley et al., (1994) and Gburek et al. (2000). The indices

are calculated for each NRI data point using NRI and other data and account

for soil factors, climate, and production management decisions that affect

runoff and leaching (see Appendix 2). 

Using these indices, we divided cropland acres into five equal (by land area)

categories by overall potential for nitrogen runoff, phosphorus runoff, and

nitrogen leaching (we label these very low, low, medium, high, very high).

We overlaid data on the 20 percent of cropland acres with very high potential for nitrogen and phosphorus runoff or nitrogen leaching with data on

government payments (figs. 13, 14, and 15). Results suggest that acres with

the highest potential for nutrient runoff and leaching are located mostly in

areas with relatively high government payments. Unlike highly erodible

cropland acres, which often occur in more (economically) marginal agricultural areas, nutrient runoff and leaching appear to be most problematic

where crop production is the principal agricultural land use and soils are

highly productive.

Using methods detailed in Appendix 1, we estimate that 75 percent or more

of cropland acres with medium, high, or very high potential for phosphorus

runoff, nitrogen leaching, or nitrogen runoff are located on farms that

receive government payments (fig. 16). The average annual payment

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Figure 13

Distribution of commodity program payments and very high nitrogen runoff potential, 1998

Dollars/cropland acre

0 - 6.15

6.16 - 23.68

23.69 - 137.13 

No data

Source: Farm Service Agency and ERS.

1 dot = 25,000 acres 

of cropland with very

high nitrogen runoff potential
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Figure 14

Distribution of commodity program payments and very high phosphorus runoff potential, 1998

Dollars/cropland acre

0 - 6.15

6.16 - 23.68

23.69 - 137.13 

No data

Source: Farm Service Agency and ERS.

1 dot = 25,000 acres of 

cropland with very high 

phosphorous runoff potential

Figure 15

Distribution of commodity program payments and very high nitrogen leaching potential, 1998

Dollars/cropland acre

0 - 6.15

6.16 - 23.68

23.69 - 137.13 

No data

Source: Farm Service Agency and ERS.

1 dot = 25,000 acres of 

cropland with very high 

nitrogen leaching potential
exceeds $15 per cropland acre on farms with medium to very high nutrient

loss potential for all three nutrient loss indicators, exceeding $20 per acre in

several cases (fig. 17). Thus, farms with the highest nutrient loss potential

tend to participate heavily in farm programs and receive larger-than-average

per-acre payments. Note, again, that the payment data used in this study are

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Figure 16

Percent of cropland acres on farms receiving and not receiving 

payments, by potential nutrient loss to water, 1997

Source: Farm Service Agency and ERS.

0 10 20 30 40 50 60 70 80 90 100

Phosphorus runoff

Nitrogen leaching

Nitrogen runoff

 Receiving

Very high

High

Medium

Low

Very low

Receiving

Percent

Not

Figure 17

Average farm program payment per acre of cropland, 

by potential nutrient loss to water, 1997

Source: Farm Service Agency and ERS.

Phosphorus runoff

Nitrogen leaching

Nitrogen runoff

0 5 10 15 20 25

Very low

Low

Medium

High

Very high

Dollars per cropland acre
from 1997, a year of low payments relative to spending in more recent years

and projected spending under the 2002 Farm Security and Rural Investment

(FSRI) Act. Whether these payments are large enough to leverage actions

that would produce significant reductions in nutrient runoff and leaching

depends on the techniques available to reduce nutrient runoff and the cost of

implementing them.

Reducing Nutrient Runoff:

Nutrient Management and Buffer Practices

Our results to this point suggest that (1) nutrient application by crop 

producers is a large source of agricultural nutrient runoff and leaching, and

(2) producers with medium to very high potential for nutrient loss also participate heavily in farm programs. Next, we consider practices for reducing

nutrient runoff and leaching. Are these practices effective and enforceable?

Are government payments large enough to encourage widespread adoption

if program eligibility was contingent on the application of these practices?

One way to reduce nutrient loss from cropland is to encourage crop producers to manage nutrients more carefully. The objective of nutrient management is to match nutrient application rates, timing, and placement to plant

needs (accounting for nutrients already available in the soil), thereby minimizing the level of “excess” nutrient (nutrient in excess of crop uptake) in

the soil at any given time. Excess nutrients are most vulnerable to loss.

Nutrient management is actually a collection of practices designed to help

farmers match nutrient applications to nutrient needs (e.g., soil testing, split

fertilizer application, legume crediting, reasonable yield goals, etc.). 

Because it is a collection of practices that can be combined in many ways,

nutrient management is flexible and can be tailored to each farm’s unique

circumstances, making it a potentially cost-effective way to reduce excess

nutrients in the soil. However, because nutrient application rates, methods,

and timing are very difficult to observe, enforcement could be difficult and

expensive (Malik, 1993; Amacher and Malik, 1996, 1998; Johansson, 2002).

Nor is it guaranteed that nutrient management will reduce runoff and leaching to levels consistent with significantly improved water quality. If heavy

rains fall just after fertilizer application, significant runoff and leaching can

still occur, even if application is timed to better coincide with plant needs. 

A second way to address nutrient runoff is through the use of buffer practices, such as filter strips, grassed waterways, or restored wetlands to intercept nutrients before they leave the field or farm. Buffer practices can

remove a substantial proportion of the sediment and nutrients from field

runoff. A recent survey article (Dosskey, 2001) shows that, on average, filter

strips remove 50-90 percent of nitrogen and phosphorus from runoff. Unlike

nutrient management, buffer practices are easily enforceable because their

existence and effectiveness are readily observed. Buffers can be more

expensive to implement because some cropland is taken out of production,

and will be ineffective where nitrogen leaches to ground water or reaches

water bodies through subsurface flow.

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Cost of Nutrient Management14

If nutrient management became a condition of eligibility for farm programs,

use of nutrient management would increase only if nutrient management

costs were lower than the net benefits of farm program participation (prior

to the addition of the nutrient management requirement), and if the requirements were effectively enforced. As with soil conservation practices, the

cost of nutrient management is likely to vary significantly among producers,

and may depend on cropping patterns, soils, climate, management skill, and

producers’ risk preferences. Nutrient management plans typically include a

variety of practices or management decisions that affect the overall amount

of nutrient applied, the timing of fertilizer applications, and the method of

application. For some producers, nutrient management could lower fertilizer

bills. For others, lower fertilizer bills might be more than offset by the cost

of soil and plant tissue testing, increased cost of fertilizer application, or

increased risk of delayed application that can decrease crop yields. 

Determining the appropriate level of nutrient application involves testing

the soil to determine available nutrients, and, in cases where nutrients are

applied to a growing crop (side dressing), other tests (such as plant tissue

testing) to determine plant needs. Sample collection and testing can be timeconsuming and costly. Even with soil and plant tissue tests, uncertainty

about the relationship between nutrient application and crop yields can

expose producers to the risk of low yields as they attempt to match nutrient

application to plant needs. Research shows that assumptions about the relationship between nutrient uptake and crop yields can significantly affect calculation of an optimal fertilizer application rate (Grimm et al., 1987; Larsen

et al., 1996), possibly leading to overfertilization or lower-than-expected

crop yields. Year-to-year variation in growing conditions may also encourage overapplication of nutrients. Because crop nutrient needs are higher in

years with good growing conditions, it may be profitable to use more fertilizer in anticipation of getting peak yields in particularly good years

(Babcock, 1992; Dai et al., 1993).

Timing fertilizer applications to coincide with plant nutrient demand can

also expose producers to higher cost and risk. Fertilizer prices tend to be

lower in the fall, well in advance of planting (Huang et al., 1994), possibly

making fall or early spring application less costly, even if more fertilizer is

needed to make up for the runoff and leaching losses. Higher application

costs are incurred in the use of “split” application, where fertilizer is applied

at planting and during the growing season when plant needs are high.

Moreover, delaying fertilizer application exposes producers to the risk of

weather-related delays when plant needs are high. Some producers may rely

on early application to reduce this risk (Huang et al., 1994; Feinerman et al.,

1990). Better fertilizer placement can also reduce fertilizer use, but may

increase application costs. For example, planter-mounted application attachments allow fertilizer to be placed directly in the root zone, increasing plant

uptake. Fertilizer savings, however, must be considered against the cost of

additional equipment. 

Again, we use the EQIP database to provide a sense of the range of potential costs for nutrient management. Bear in mind that EQIP data represent

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14The authors greatfully acknowledge the contribution of Glen Sheriff

to the development of this section.
the level of payments some producers were willing to accept (WTA) for

undertaking nutrient management—not necessarily the actual out-of-pocket

cost of the practices. For some practices, producer WTA may be higher than

out-of-pocket costs. For example, the cost of soil sample testing may be

small compared with the opportunity cost of the time required to collect soil

samples. On the other hand, fertilizer cost savings could offset some portion

of these costs. 

Nationally, EQIP participants adopting nutrient management in crop production received an average of $7.30 per acre, while 95 percent of these producers received $15 or less. Given a 3-year payment period and a 4-percent

rate of discount, the net present value (NPV) of the average payment is

$19.20 with 95 percent of producers receiving $39.45 or less. By region, the

NPV of average incentive payments ranges from $12.82 in the Mississippi

Portal, where 95 percent of participants received $14.03 or less, up to an

average of $26.80 in the Fruitful Rim, where 95 percent of participants

received $55.50 or less (table 7). A $20-per-acre annual commodity program

payment would translate into $95 over 6 years and $212 over 20 years—

substantially more than EQIP participants in any region of the country are

willing to accept for undertaking nutrient management.

Cost of Buffer Practices

The term “buffer practices” refers to a range of practices that are designed

to intercept sediment and nutrients at the edge of the field or farm. For

example, practices eligible for continuous signup in the Conservation

Reserve Program (CRP) that are particularly relevant for nutrient runoff

include riparian buffers, filter strips, grassed waterways, and contour grass

strips. The cost of buffer practices may include the establishment of vegetative cover, land shaping, and the retirement of productive cropland, although

only a small amount of land is required. In the case of filter strips, for

example, only 1-3 percent of the area drained through a filter strip is needed

in the filter.15

One source of information on producers’ willingness to accept payment for

installing buffer practices is the CRP continuous signup for high-priority

practices. High-priority practices include filter strips, grassed waterways,

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15For filter strips, minimum area

depends on two factors. First, the ratio

of drainage area to filter strip size

depends on the RUSLE (Revised

Universal Soil Loss Equation) Rfactor. For R-factors of 0-35, a fieldto-filter strip area ratio of 70:1 is

appropriate, 60:1 is required for R-factors of 35-175, and 50:1 is needed for

R-factors greater than 175. Second, filter strips must have a minimum flow

length (width) of 30 feet. Depending

on the size and shape of the field, this

requirement may result in a larger

field-to-filter strip area ratio than otherwise required. For more information,

see USDA-NRCS, 2002c.

Table 7—Average and 95th percentile EQIP incentive payments for nutrient management

ERS Farm 3-year NPV of 3-year NPV of Number of

Resource Region Average annual 95th percentile average annual 95th percentile contracts

--------------------------Dollars per acre--------------------------

Heartland 7.07 12.00 19.61 33.29 9,819

Northern Crescent 5.96 11.99 16.55 33.28 7,728

Northern Great Plains 7.30 13.67 20.26 37.93 847

Prairie Gateway 6.60 17.25 18.32 47.87 6,460

Eastern Uplands 8.51 10.29 23.63 28.55 2,546

Southern Seaboard 8.45 10.00 23.44 27.75 14,787

Fruitful Rim 9.66 20.00 26.80 55.50 2,922

Basin and Range 7.13 25.00 19.79 69.38 950

Mississippi Portal 4.62 5.06 12.82 14.03 3,361

U.S. 7.31 15.00 20.29 41.63 49,420

Source: ERS analysis of EQIP data.
contour grass strips, and other buffer practices. Nationally, continuous

signup acres receive an average payment of $92 per acre per year, more

than double the average payment for land in general CRP signup ($43 per

acre per year) (Barbarika, 2001). Up to 50 percent cost sharing is also provided for practice installation. Cost-share amounts for some common buffer

practices include $59 per acre for contour grass strips, $69 for grass filter

strips, and $209 for riparian buffers. Because buffer practices generally

involve only a small proportion of cropland acres, the overall cost per cropland acre is modest. 

As an example, consider installation of a grass filter strip. Assume that $92

per acre represents foregone annual returns, per acre establishment costs are

twice the average cost share listed above (50 percent of cost is shared in

CRP), and 2.5 percent of cropland is needed. Capitalizing forgone revenue at

4 percent, a grass filter strip would cost roughly $2.50 per cropland acre per

year. This is well below the average program payment of $15-20 per acre (or

more in recent years) on farms with the most serious nutrient loss potential.

Wetland restoration could also be used to intercept nitrogen runoff before it

contaminates surface water. Ribaudo et al. (2001) compare nitrogen use

reduction to wetland restoration strategies for reducing nitrogen flows from

the Mississippi Basin to the Gulf of Mexico. For nitrogen runoff reductions

of up to 26 percent, they found that reducing nitrogen use was the less

expensive strategy, while wetland restoration would be more cost-effective

in achieving larger runoff reductions. Wetland restoration can be more

expensive than other buffer practices ($50-$800 per wetland acre in the

Ribaudo study), in addition to the opportunity cost of ending crop production, and will not be appropriate for all locations. Nonetheless, wetland

restoration could play a role in reducing nitrogen runoff to water. 

Assuming payments will continue indefinitely, compliance could provide

sufficient leverage for widespread adoption of either nutrient management

to reduce the potential for nutrient loss or conservation buffers to intercept

nutrient runoff. While this new compliance requirement could be leveraged

with existing program payments, some producers who would be subject to

the new requirement are already bearing the cost of existing compliance

requirements. Figure 18 shows the potential for overlap between existing

compliance requirements and a potential nutrient-related requirement. Map

colors indicate land subject to existing compliance requirements—noncropped wetland and highly erodible land (HEL) near existing cropland and

HEL cropland—as a proportion of total cropland. The darker the color, the

larger the potential impact of existing compliance mechanisms. The dots

represent land with high or very high potential for nutrient runoff and leaching—those acres most likely to be affected by a nutrient requirement. 

The greatest potential for overlap between the potential nutrient requirement

and existing compliance requirements appears to be in the Heartland and the

Mississippi Portal, particularly northern portions in Arkansas and Tennessee.

Significant overlap may also occur in Eastern Pennsylvania and Maryland. 

In the Corn Belt and Mississippi River Delta, crop production is a predominant agricultural enterprise and related farm program payments are relatively

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large. In 1997, farm program payments in most counties in these areas averaged more than $23 per acre (represented by the darkest shaded areas in 

fig. 1). Over the 6-year life of the farm bill, the net present value of a $23

stream of annual payments would be $109.63 per acre. Keep in mind that

commodity program payments were relatively low in 1997 and that farm

commodity programs are likely to continue past the end of the current farm

bill. 

Meanwhile, regional average costs for soil conservation and nutrient management practices are at or near national averages (see tables 5, 6, and 7). In

areas where the overlap is most likely, moreover, nutrient management costs

may be lower than the cost of addressing soil erosion. Because the cost of

erosion reduction is modest, the combined cost of erosion reduction and

nutrient management is unlikely to exceed (or even come close to) the value

of farm program payments. In the Mississippi Portal region, the total cost

for making a transition to the use of soil conservation practices is larger for

each of the most commonly used practices. Producer willingness to accept

(WTA) payments for conservation cropping, conservation tillage, and seasonal residue management are $14.86, $28.54, and $12.87 per acre, respectively, while WTA for nutrient management averaged $12.80 (see tables 5,

6, and 7). In the Heartland region, WTA for conservation cropping, conservation tillage, and seasonal residue management is $17.86, $25.26, and

$18.60 per acre, respectively, while WTA for nutrient management averages

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Figure 18

Potential for overlap between existing compliance requirements and nutrient requirement

Proportion of 

cropland subject to 

existing compliance

<10%

11% - 25%

26% - 50%

> 50%

No data

Source: ERS and NRI data.

1 dot = 25,000 acres of 

very high nutrient runoff or 

leaching potential
$19.60. Nonetheless, a new nutrient-related compliance requirement could

cause financial stress for some producers. Specific cases of hardship could

be addressed through variances (as under existing policy).

In Pennsylvania and Maryland, crop production is significant but nutrient

problems are more likely to be driven by livestock waste. In most counties

in these areas, nitrogen and phosphorus in livestock waste already exceed

the assimilative capacity of cropland and pasture land (Kellogg et al., 2000).

Farm program payments are not as uniformly high as they are in the

Heartland and the Mississippi Portal, so the compliance requirement may be

less effective overall. However, recently promulgated Clean Water Act regulations require comprehensive nutrient management on large livestock operations. Also, changes in EQIP eligibility requirements and funding levels

will assist livestock producers in reducing environmental damage from

excess nutrients. In this context, the compliance requirement may be a useful part of the overall mix of policies designed to reduce nutrient loss to the

environment. 

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Conclusions

Compliance mechanisms were enacted primarily as a method of removing

inconsistencies between farm income support and conservation programs.

However, compliance mechanisms are also unique policy tools that, when

used in conjunction with existing commodity programs, possess some desirable economic properties. Compliance mechanisms are less likely than subsidies to produce unintended consequences and may be effective when subsidy programs can be especially difficult or costly to use. Because compliance mechanisms depend on other programs, however, their effectiveness is

limited. Problems associated largely with program crop production, such as

soil erosion and nutrient runoff from fertilizer application, are good candidates for a compliance requirement. The design of the compliance requirement (i.e., environmental standards or practice requirements) will determine

the cost and enforceability of the compliance requirement. 

While USDA’s Compliance Status Review process appears to have flaws, it

is also likely that compliance rates are high and that significant erosion

reduction has been achieved on land subject to Conservation Compliance.

Our analysis shows that most highly erodible cropland (HEL), particularly

wind-erodible cropland, is located on farms that receive government payments. More important, reduction in excess erosion on HEL cropland—the

erosion specifically targeted by Conservation Compliance—has been larger

on farms receiving payments (farms subject to compliance) than on farms

not receiving payments, particularly for wind-erodible soils. Placing compliance in a larger context, however, we find that soil erosion rates have

declined on both HEL and non-HEL cropland, in all regions of the country,

and on farms receiving program payments as well as those not receiving

program payments. 

These results could be consistent with more than one hypothesis about the

role of Conservation Compliance in reducing soil erosion. Compliance

could be viewed as prompting the adoption of soil conservation practices.

On the other hand, one could argue that practices like conservation tillage

would eventually have been adopted where they are cost-effective, regardless of Conservation Compliance. In other words, the compliance requirement happened to coincide with a period of technical change favorable to

soil erosion reduction. Finally, Conservation Compliance may have accelerated the adoption of low- or no-cost practices. For example, conservation

tillage may have spread more rapidly in areas where it was shown to be

cost-effective by producers who adopted it in response to compliance. 

Likewise, evidence suggests that Swampbuster was only one factor among

several that could have explained the rapid drop in wetland conversion for

agricultural production. A dwindling number of easily convertible wetland

acres and long-term declines in real prices for agricultural commodities may

also be contributing to reductions in wetland drainage for crop production.

In the aftermath of the Supreme Court’s decision in Solid Waste Agency of

Northern Cook County (SWANCC) v. United States Army Corps of

Engineers, however, Swampbuster may be a more important component of

U.S. wetland conservation policy.

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Extending compliance to address nutrient runoff and leaching from land in

crop production, whether through management of nutrient application or

interception of nutrients with buffer practices (or both), could provide some

additional environmental benefits. Farms where nutrient runoff to water is

high are quite likely to receive substantial government payments. Moreover,

our analysis shows that the value of government payments will generally

exceed the cost of addressing nutrient loss through either nutrient management or buffer practices, suggesting that a compliance mechanism could be

effective in leveraging the adoption of practices designed to reduce nutrient

runoff. It is important to note that some producers who are already bearing

the cost of HEL or wetland conservation requirements are also located in

areas where nutrient-related compliance requirements would likely be most

significant. Where crop production is predominant (the Heartland and

Mississippi Portal regions), farm program payments are also large and

would likely provide ample incentive for the additional requirement. Where

much of the excess nutrient is generated by livestock production

(Pennsylvania and Maryland), compliance alone might be less effective, but

could complement other policies designed to reduce nutrient loss to the

environment. 

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U.S. Environmental Protection Agency and U.S. Department of Agriculture.

1998. Clean Water Action Plan: Restoring and Protecting America’s

Waters. Publication No. EPA-840-R-98-001. 

U.S. Department of the Interior, U.S. Geological Survey. 1999. The Quality

of Our Nation’s Waters: Nutrients and Pesticides. U.S. Geological Survey

Circular 1225. Reston, VA. 

U.S. General Accounting Office. 2003. Agricultural Conservation: USDA

Needs to Better Ensure Protection of Highly Erodible Cropland and

Wetlands. Publication No. GAO-03-418, April.

Watts, M.J., L.D. Bender, and J.B. Johnson. 1983. Economic Incentives for

Converting Rangeland to Cropland. Bulletin 1302, Montana State

University, Cooperative Extension Service, Bozeman, MT.

Williams, J.R., C.A. Jones, and P.T. Dyke. 1984. “A modeling approach to

determining the relationship between erosion and soil productivity.”

Trans. ASAE 27: 129-144.

Wischmeier, W.H., and D.D. Smith. 1978. Predicting Rainfall Erosion

Losses—A Guide to Conservation Planning. U.S. Department of

Agriculture, Science and Education Administration, Agriculture

Handbook No. 537. 

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Appendix 1. Linking Environmental Indicators

to Farm-Level Data

Environmental indicators are linked spatially to farm-level economic data

using a Geographic Information System (GIS). GIS techniques are used to

create "surfaces" of environmental indicator values. Farm-level data are

then linked to indicators by locating the farm on the environmental indicator

surface and assigning the surface value at that location. Results are then

aggregated to the national or ERS Farm Resource Region level. This spatial

association is valid to the extent that spatial variations in climate, land

resources (e.g., soil productivity and erodibility), and farms (e.g., variation

in crops and production practices) are interrelated. ERS Farm Resource

Regions are, in fact, based on identification of areas with relatively uniform

farms, soils, and climate. The regions are based in part on a cluster analysis

of U.S. farm characteristics (Sommer and Hines, 1991) and on USDA land

resource regions (USDA-SCS, 1981).

Environmental indicators are based largely on data from the National

Resources Inventory (NRI). NRI point data files are collected and maintained by the USDA's Natural Resources Conservation Service (NRCS) and

contain detailed data on land use and condition for each of more than

800,000 points nationwide, including estimates of water (sheet and rill) and

wind erosion on cropland. Surfaces for highly erodible land, acres with

excess erosion, and the change in excess erosion are derived from NRI.

Data from other sources are combined with NRI to create the nitrogen and

phosphorus runoff and nitrogen leaching indices described in Appendix 2. 

The surfacing technique employed is the Average Shifted Histogram (ASH)

estimator, which is a non-parametric regression procedure designed to

assess the density of certain characteristics in the overall land base, e.g., the

prevalence of highly erodible land. Indicator surface values are developed

on a per-cropland-acre basis to facilitate combining these measures with

ARMS data. For HEL cropland, for example, the surface value is the

proportion of cropland acres that are highly erodible.

The distribution of farms by commodity specialization and program

payments is derived from the 1997 Agricultural Resource Management

Survey (ARMS). ARMS is an annual sample survey of farms and agricultural commodities conducted to obtain information about the status of

farmers' finances; production practices for specific commodities; use of

natural, physical, and financial resources; and household economic wellbeing. Sponsored jointly by ERS and USDA’s National Agricultural Statistics Service (NASS), ARMS began in 1996 as a synthesis of the former

USDA cropping practice, chemical use, and farm costs and returns surveys,

which dated back to 1975. Of particular interest for our application, agricultural producers16 are asked about land use, cropping patterns, and government program participation. 

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16Defined as "all establishments

except institutional farms that sold or

would normally have sold at least

$1,000 of agricultural products during

the year" in the 48 contiguous States.

For more information, see

www.ers.usda.gov\Briefing\ARMS.
Regional or national estimates of acreage with specific environmental characteristics (e.g., the number of HEL cropland acres) on farm with payments

are calculated as:

where γk is a zero-one indicator of whether farm k receives farm program

payments that would make it subject to conservation compliance; Αk

ARMS is

the cropland acreage in farm k in Phase III of ARMS; and ρik is the value

per acre of indicator i in the area where farm k is located. The variable ρik is

constructed using the surfacing techniques described above. Because farms

surveyed in Phase III of ARMS are located only at the county level, values

for ρik are assigned at the center of the county (the county centroid). 

This procedure provides estimates that are often quite close to the original

NRI estimates. Appendix table 1 provides estimates reported in the text

(derived using the procedure detailed above) and estimates derived directly

from NRI. National estimates of the extent of land that is highly erodible

due to the potential for water (sheet and rill) erosion are extremely close to

NRI estimates. Using the ARMS-NRI merged data, we estimate that 55.19

million acres are highly erodible due to water, less than 1 percent higher

than the 54.69-million-acre estimate obtained directly from NRI. For wind

erosion, the ARMS-NRI merged data indicate 55.54 million acres are highly

erodible, about 7 percent higher than the 51.61-million-acre estimate

obtained directly from NRI. 

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A A i kk

ARMS

k K

= ik

∈

∑γ ρ

Appendix table 1—Acreage estimates using indictor surfaces and

ARMS versus acreage estimates directly from NRI

Estimate NRI estimate Difference

million acres percent

HEL cropland, wind 55.54 51.61 7.61

HEL cropland, water 55.19 54.69 0.91

Total HEL cropland, by region

Prairie Gateway 30.24 26.67 13.39

Heartland 23.25 23.24 0.04

Northern Great Plains 17.04 18.49 -7.84

Northern Crescent 10.08 9.77 3.17

Fruitful Rim 8.81 7.31 20.52

Basin and Range 7.43 6.54 13.61

Eastern Uplands 7.29 5.77 26.34

Southern Seaboard 2.81 3.63 -22.59

Mississippi Portal 1.80 2.31 -22.08

HEL cropland, wind, erosion>T* 25.38 22.26 14.02

HEL cropland, water, erosion>T* 34.71 34.95 -0.69

*T is the soil loss tolerance, the maximum rate of soil loss that can be sustained indefinitely

without productivity damage.

Source: ERS analysis of NRI and ARMS data.
Appendix 2. Methodology for Constructing

Nutrient Loss Indices 

Nitrogen and Phosphorus Runoff Index

The Nitrogen and Phosphorus Runoff Indexes are based upon "The modified P index system to rate the potential P loss in runoff from site characteristics" found in A Conceptual Approach for Integrating Phosphorus and

Nitrogen Management at Watershed Scales by Heathwaite et al., 2000.

The indexes consist of four transport factors and two source factors. Index

scores, based on the factors described below, are computed as:

Nitrogen score = (soil erosion index score * runoff index score *

irrigation index score * distance to water index score) * (commercial nitrogen application + manure nitrogen application)

Phosphorus score = (soil erosion index score * runoff index score

* irrigation index score * distance to water index score) * (commercial phosphorus application + manure phosphorus application)

The indexes are calculated for each cropland data point in the 1997 National

Resources Inventory (NRI) database, excluding land in aquaculture and

horticultural crops. The NRI point data files are collected and maintained by

USDA's Natural Resources Conservation Service (NRCS) and contain

detailed information on land use and condition for more than 800,000 points

nationwide. A variety of other data sources are used to calculate some of the

individual factors.

Transport Factors

The soil erosion index score is based on estimated sheet and rill erosion

reported in the 1997 NRI. Erosion rate estimates, in tons per acre per year,

were made using the Universal Soil Loss Equation (USLE; see Wischmeier

and Smith, 1978). Erosion rate estimates are used to classify cropland into five

categories of roughly equal size, by acreage. Each of the five groups was then

given a score, from lowest to highest, of 0.6, 0.7, 0.8, 0.9, or 1.0, respectively.

The irrigation erosion index score is based on the existence of irrigation

and land slope, both of which are reported in the NRI. Land without irrigation was assigned an irrigation erosion value of 0.6. Land slope was used to

classify irrigated cropland into four categories of roughly equal size, by

acreage. Each of the four groups was then given a score, from lowest to

highest, of 0.7, 0.8, 0.9, or 1.0, respectively.

The runoff index score is based on the methodology used by Kellogg (1997).

Average annual precipitation was computed for each NRI point using various

sources of weather data and methods of interpolation. Runoff was then estimated using a runoff curve value taken from the NRCS runoff curve table.17

The runoff curve value depends on cropping type, conservation management,

and soil hydrologic group. Cropping type was determined by land use as

shown in appendix table 2. On highly erodible land, conservation management was considered good if erosion was less that twice the soil loss tolerance

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17See http://abe.www.ecn.purdue.

edu/~engelb/agen526/Runoff/cn_table.

html
or "T" factor. On non-highly erodible land, conservation management was

considered good if erosion was less than T. The soil hydrologic group was

taken from the Soil Interpretive Record (SIR) database associated with the

NRI. The runoff estimates were used to classify cropland into five categories

of roughly equal size, by acreage. Each of the five groups was then given a

score, from lowest to highest, of 0.6, 0.7, 0.8, 0.9, or 1.0, respectively.

The contributing distance or distance to water index score is based on

distance to water available in the 1997 NRI database. The values for distance

to water were placed into the five groups as described in Heathwaite et al.,

2000. 

Source Factors

Commercial nitrogen and phosphorus application rates are computed at the

county level. Each NRI point in a given county is assigned the county application rates. The values were derived from commercial fertilizer expenses

from the 1997 Census of Agriculture.

Manure nitrogen and phosphorus application rates are computed at the

county level. Each NRI point in a given county is assigned the county

average application rates.

Nitrogen Leaching Index

The Nitrogen Leaching Index is based upon "The N index system to rate the

potential loss in leaching from site characteristics determining source and

transport factors" found in A Conceptual Approach for Integrating Phosphorus and Nitrogen Management at Watershed Scales by Heathwaite et al.,

2000.

The index consists of two transport factors and two source factors. Index

scores, based on the factors described below, are computed as:

Nitrogen score = (soil texture index score * permeability index

score) * (commercial nitrogen application + manure nitrogen 

application)

The index is calculated for each cropland data point in the 1997 NRI database, excluding land in aquaculture and horticultural crops. A variety of data

sources were used to compile the individual factors. Nitrogen source factors

are as described above. 

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Appendix table 2—Runoff curve table based on NRI land use 

NRI land-use 

designation values Runoff curve cropping type

11 – 20 Row crops

111-116 Small grains

141 - 143 Meadow

170 - 180 Used most recent land-use 

designation from cropping history.

Source: National Engineering Handbook, USDA-NRCS.
Transport Factors

The soil texture index score was assigned following Heathwaite et al.,

2000.18 Data on soil texture data is from the 1997 NRI point database. 

The permeability index score is based on a formula developed by Williams,

Jones, and Dyke (1984). The formula uses data on precipitation, irrigation,

and soil hydrologic group. Average annual and monthly precipitation was

computed for each NRI point using various weather data sources and interpolation methods. The presence of irrigation was determined using NRI data.

The soil hydrologic group was taken from the SIR database. The permeability

estimates were used to classify cropland into five categories of roughly equal

size, by acreage. Each of the five groups was then given a score, from lowest

to highest, of 0, 1, 2, 4, or 8, respectively. 

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18A few soil texture categories that

did not appear in this publication were

assigned index scores by the authors.