United States Department of Agriculture

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Economic

Research

Service

Economic

Research 

Report 

Number 170

July 2014

United States Department of Agriculture

Additionality in U.S. Agricultural 

Conservation and Regulatory 

Offset Programs

Roger Claassen, John Horowitz, Eric Duquette, 

and Kohei Ueda

Roger Claassen, John Horowitz, Eric Duquette, 

and Kohei Ueda

Additionality in U.S. Agricultural 

Conservation and Regulatory 

Offset Programs

What Is the Issue?

The Federal Government spent more than $6 billion in fiscal year 2013 on voluntary 

conservation payment programs to encourage the adoption of a wide range of conservation practices that address multiple environmental and resource conservation goals. 

Conservation payments can also come from private industry, particularly in the context 

of an agricultural offset market established as part of a cap-and-trade system designed to 

reduce nutrient or greenhouse gas (GHG) emissions. Payments lead to improvement in 

environmental quality only if farmers and ranchers who receive them adopt conservation 

practices that would not have been adopted without the payment. 

When a voluntary payment causes a change in practice(s) that leads to improved environmental quality, these changes are “additional.” For any type of voluntary payment, 

there is some risk that the farmers or ranchers who receive them would have adopted the 

required practice(s), even without the payment. This study measures additionality for a 

number of common conservation practices typically supported by voluntary conservation 

payments and examines ways to increase additionality. 

What Did the Study Find?

Additionality depends largely on the characteristics of the practices support by conservation payments. Practices that are expensive to install or provide only limited onfarm 

benefits are unlikely to be adopted without payments. Practices that can be profitable are 

much more likely to be adopted without payments, although the costs and benefits of these 

practices can vary widely across farms. Many farms, for example, have adopted conservation tillage without receiving conservation program payments, while other farms have not. 

Two broad categories of conservation practices are considered:

• Structural and vegetative practices: Additionality is high (roughly 80 percent) for 

structural and vegetative practices such as terraces and grassed waterways. These 

practices typically have high installation costs and offer limited onfarm benefits, 

at least in the short run. Most farmers and landowners are unlikely to install them 

without assistance. 

July 2014
www.ers.usda.gov

• Conservation management practices: Additionality results are mixed. We estimate that conservation 

tillage, when supported by payments, is just over 50 percent additional—considerably lower than for 

either category of structural practices. Our analysis of nutrient management supported by conservation program payments shows that farmers who receive payments are much more likely to have written 

nutrient management plans than farmers who did not receive payments. Results are less clear, however, 

for implementation of actual nutrient management practices. Farmers who received payments applied 

only 1.2 percent of nitrogen fertilizer (on average) in the fall before planting corn, while we estimated 

that they would have applied 12 percent of nitrogen in the fall, on average, without a payment. It is not 

clear, however, that corn farmers who received payments applied less nitrogen or were more likely to 

apply it after planting, when crop uptake is greatest. 

Similar results are obtained in our analysis of nutrient management practices (reduced nitrogen application) 

supported through a hypothetical offset market. In our simulation, credits are earned by applying nitrogen below 

a “prevailing practice” baseline rate. If the offset credits sell for $15/metric ton (tonne) of carbon dioxide equivalent (CO2-e), 30 percent of the credits would be additional. At a credit price of $35/tonne CO2-e, additionality 

would increase to 50 percent or more. Nonadditionality arises because farming practices (nitrogen application 

rates) differ greatly across farms that appear to be similar, given the data used in our analysis. 

While complete additionality cannot be ensured, it may be possible to design programs to increase it. In 

conservation programs, additionality could be increased by putting higher priority on practices that are less 

likely to be undertaken without payment support. However, if those practices are also more costly or produce 

less environmental benefit (when they are additional), greater additionality may not be cost effective. In a 

GHG offset program, additionality can be increased by limiting eligibility to regions where additionality is 

more likely than in other regions, but it also must be weighed against higher costs. 

How Was the Study Conducted?

For existing conservation programs, additionality is estimated using propensity score matching with data 

from the 2009-2011 Agricultural Resource Management Survey (ARMS), which is sponsored jointly by 

USDA's Economic Research Service and National Agricultural Statistics Service. Once a farmer has received 

a conservation payment, we cannot observe what the farmer would have done without the payment. To estimate what the farmer might have done without the payment, we look at very similar or “matching” farms 

that have not received payments. The action taken by these matching farms, on average, is our estimate of 

what the farmer who received the payment would have done without the payment. The difference between the 

action taken, given the payment, and the action that would have been taken without the payment is a farmspecific measure of additionality. The measures we report are the average additionality across farms receiving 

payments. Units of measurement depend on the action taken. For nitrogen application rate changes due to 

payments for improved nutrient management, for example, additionality is measured in pounds (lbs) per acre 

of applied nitrogen. For practice adoption (e.g., conservation tillage) additionality is the probability that the 

adopted practice is, in fact, additional. For conservation tillage, additionality of 0.50 means that half of the 

conservation tillage practices supported by payments are additional. 

For the offset credit analysis, we model producer response to hypothetical offset payments and estimate 

participation using the 2009 wheat and 2010 corn data from ARMS. Using ARMS data and nitrogen 

yield response functions drawn from the literature, we estimate the number of offset credits that would be 

provided by each farm, the proportion of the credits that would be additional, and the cost of providing 

those credits. We use a “prevailing practices” baseline, which is the average nitrogen application rate for 

farms in a small area with relatively uniform soils and climate. We analyze a number of “safety margins” 

(more stringent baselines or other eligibility criteria meant to reflect a conservative estimate of business-asusual practices) to estimate the effect of these program design options on additionality.