COST

- BENEFIT ASSESSMENT

Date: December 8 , 2008 Agency: USDA Farm Service Agency

Contact: Alex Barbarika Economic and Policy Analysis Staff Washington. D.C

. 20250 (202)

- 720

- 7093

I. Title

.

Certain Food, Conservation, and Energy Act of 2008 Provisions Related to the Conservation Reserve Program.

II. Need for Action

.

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill), Public Law 110

- 246, was enacted June 18, 2008. This cost

- benefit assessment (CBA) provides the analysis accompanying an interim rule that addresses selected changes to the Conservation Reserve Program (CRP). Changes made by the 2008 Farm Bill that are discretionary are to be analyzed in a later CBA that will a ccompany a later rule.

Among other things, the 2008 Farm Bill expanded the Farmable Wetlands Program

, which provides potentially large environmental benefits relative to acreage enrolled, while also providing economic benefits to owners and operators of e ligible lands. The bill also provides cost

- share funds to encourage thinning of CRP tree plantings, which

will i mprove wildlife habitat.

III. Summary of Costs and Benefits

.

This assessment discusses the benefits qualitatively and provides quantitati ve estimates of

costs

, based primarily on assumptions

. Costs are based on estimates of the amount of land that will be eligible, assumed participation rates and annual enrollment, and estimated per

- acre costs. Based on these assumptions and estimates, th e costs of implementing the 2008 Farm Bill changes considered in the interim rule are estimated to total $79.6 million through FY 2012 and $191.2 million through FY 2018. This averages to $19.1 million per year over 10 years (Table 1)

.

Environmental bene fits c ould be numerous, but their extent would depend on participation and the specific conservation measures adopted . Tree thinning would result

in enhanced wildlife habitat and carbon sequestration . E nrollment of aquaculture ponds

and flooded farmland and associated buffers c ould increase migratory waterfowl and other wildlife species populations, reduce flood damages, protect water quality, and increase carbon sequestration . C onstructed wetlands and buffers reduce nitrate loadings,

- 1

-sequester carbon, r educe down

- stream flood damages, and increase wildlife habitat.

Ranges are often used to estimate and discuss benefits and costs because of uncertainties.

For this CBA

, ranges are not employed , because benefits are qualitative and costs are highly depend e nt on assumptions.

Table 1. Cost Estimates ($1,000,000)

FY 2009

- 2012 FY 2013

- 2018 FY 2009

- 2018

Tree Thinning $43.8 $16.7 $60.5

Aquaculture Ponds $7.6 $22.6 $30.2

Flooded Farmland $17.9 $40.7 $58.6

Constructed Wetlands $10.3 $ 31.6 $41.9

Total $79.6 $111.6 $191.2

IV. Overview

.

The 2008 Farm Bill extend s Conservation Reserve Program (CRP) enrollment authority through September 30, 2012 and requires that enrollment be reduced to no more than 32 million acres beginning Octob er 1, 2009. Other changes were made, but the interim rule only addresses certain provisions, including: (1) changes to Farmable Wetland Pilot Program eligibility criteria; (2) provision of 50

- percent cost

- share for tree thinning activities; and (3) implem entation of new payment limitation applicability and new adjusted gross income

- based eligibility criteria. Table 2 provides additional details on the 2008 Farm Bill changes covered by the interim rule. Other changes that involve discretionary authority w ill be covered in a separate rule and assessment.

The provisions implemented by the interim rule are statutorily

- mandated, meaning the

no

- action alternatives are not feasible, and are used only to demonstrate impacts of the new or revised provisions. The alternatives are:

• Implement payment limit and AGI

- based eligibility provisions or not.

• Implement cost

- sharing for tree thinning or not

.

• Implement revised Farmable Wetlands Program eligibility criteria or not.

Table 2. Changes to CRP Covered by the Inte rim Rule.

Provision 2002 Farm Bill 2008 Farm Bill Comment

Conservation Reserve Program

Payment Limits $50,000 per year per

person. $50,000 per year per person or legal entity. ‘08 Farm Bill repeals “3

- entity” rule and requires direct
attribution. Provis ion assessed in separate CBA on payment
limits and AGI

- based eligibility.

- 2

-Table 2. Changes to CRP Covered by the Inte rim Rule.

AGI

- Based Eligibility 3

- year average AGI
must not exceed $2.5 million. 3

- year average AGI must not exceed $1 million. No
limit if 2/3rds from farm
income. Waivers allowed on case

- by

case basis. Impacts discussed in the separate CBA.

Cost

- share for Tree Thinning No provision. Authorizes 50

- percent

cost

- share for thinning
activities. Allows up to $100 million through 2012.

Incentives for
Indian Tribes and Limited Resource, Beginning

, and Socially Disadvantaged
Farmers and
Ranchers No provision. Adds permissive authority to provide incentives. Rule only broadly defines eligibility, but does not state
how incentives will be
determined.

Transition Option No provision. Allows incentive s to encourage transfer of expiring CRP lands to beginning and socially disadvantaged farmers
and ranchers. Rule only broadly defines eligibility, but does not state
how incentives will be
determined.

Incentives for
Pollinator Habitats No provision. Adds permissive authority to encourage development
of habitat. Rule only broadly defines pollinators, but does not state
how incentives will be
determined.

Farmable Wetland Program

Maximum
Enrollment 1 million acres. No change.

Eligibility Small non

- flood plain
wetlands and
associated buffers. Adds floodplain wetlands, constructed wetlands, former aquaculture lands, and flooded formerly
farmed wetlands. Also adds buffers to each category. Some categories are already eligible under other CRP (non

- FWP) author ity.
Flooded farmlands limited to lands subject to natural overflow of prairie wetland.

Wetland Size
Limits 10 acres per wetland, 40 acres of wetland plus buffer per tract

. 40

- acre

- limit per floodplain
and non

- floodplain wetland, and constructed
wetland. 20

- acre limit on flooded prairie land. No limit on former aquacul t ure ponds. Applies only to wetland portion,
not buffer.

Buffer Size The greater of: 3
times the size of the
wetland or 150 feet
on either side of the
wetland. As determined appropriate

an d needed by the Secretary in consultation
with State Technical
Committee. Applies to all eligibility categories.

Cropping History 3 of 10 years prior to
enrollment. No cropping requirement for aquaculture ponds or constructed wetlands; 3 of 10 years betwe en 1990
and 2002 for flooded
farmland. For floodplain and non

floodplain wetlands, 3 of 10 years prior to enrollment (no change).

- 3

-Table 2. Changes to CRP Covered by the Inte rim Rule.

Incentive Payments Same as for filter strips enrolled under
continuous CRP. No change. Incentives include Signing and
Pract ice Incentive Payments, plus 20% bonus on annual rental payment.

Payment Criteria Only 5 acres per wetland eligible for payment. All buffers eligible. All wetland and buffer acres eligible for payment. All acres receive same incentive payments as filter strips under continuous CRP.

V. Costs and Benefits.

A. Payment Limits

The $50,000 per

- year per

- person payment limit was not changed by the 2008 Farm Bill, but the way in which it is applied was changed. For CRP, no measurable impacts are

expe cted. For example, in FY 2005, 411 persons (as defined by the 2008 Farm Bill) with 2,379 contracts received payments in excess of $50,000 (allowed by the “3

- entity” rule in effect at the time). 1 The “excess” payments totaled $5.4 million out of $1.7 billi on, and do not necessarily represent an estimate of savings, because if this provision had been in effect, bidding and enrollment behavior would have been different. A more thorough description of the payment limit and AGI

- based eligibility changes are pr ovided in a
separate cost

- benefit assessment.

B. AGI

- Based Eligibility

Under 2008 Farm Bill provisions, persons or legal entities with 3

- year average adjusted gross incomes (AGI) exceeding $1,000,000 are ineligible for CRP payments, unless at

leas t 2/3rds of the income is from farming. Under the 2002 Farm Bill, the AGI

- based limit on CRP participants was $2.5 million. This change is not expected to have any measurable impacts on CRP costs or benefits. Additionally, the limit may be waived on a

c ase

- by

- case basis in order to protect land of special significance, further reducing possible impacts. The AGI changes are also addressed in the separate assessment

mentioned above.

C. Definition and Incentives for Indian Tribes and Beginning, Lim ited Resource, and Socially Disadvantaged Farmers and Ranchers

The rule describes the various eligible classes in general terms , but does not state how the incentives will be awarded, or what their magnitude they may be. Because t he incentives are discretionary, they are not analyzed in this CBA.

1 Based on USDA’s “Sec. 1614 database” public release, December 2006.

- 4

-D. Transition Option

The 2008 Farm Bill adds a new option to encourage transfer of land under expiring CRP contracts to beginning or socially disadvantaged farmers an d ranchers. The two eligibility classes are de scribed in the rule , but the type and magnitude of incentives are

not discussed. Because the contract modifications needed in order to allow the incentives

ar e discretionary, th e provision is not discussed in the rule and is not analyzed in this

CBA.

E. Incentives for Pollinators

The 2008 Farm Bill adds permissive authority to encourage development of habitat beneficial to bees and other pollinators. Pollinators are broadly defined in the rule

, but

incentives are not discussed.

F . Cost

- Share for Tree Thinning

Under the 2008 Farm Bill, all CRP lands with tree plantings are eligible for a 50

- percent

cost

- share for thinning activities where the condition of the resource would be improved. Authority for up to $100 million through FY 2012 for this purpose is provided 2

.

The benefits of tree thinning are two

- fold: First, economic benefits include higher valued

mature timber stands and support for the local forest industry. Short

- term econo mic benefits can also be derived if the local market for thinned trees is favorable, but this may not always be the case. Second, environment al benefits also can occur because wildlife habitat is improved. Thinning improves forest health, reduces wildfir e risks, and results in increased carbon sequestration

. Thinning allows sunlight to reach the understory, encouraging herbaceous plant and shrub growth, promoting biodiversity. Thinning can also open alleys and edges used by wildlife. In the Southeast, where most CRP tree plantings are found, species that could benefit include deer, rabbits and other small mammals, songbirds, turkeys, quail, amphibians, and reptiles.

Thinning is typically not done until the economics become favorable, which can be 10 to 20 years after planting in the Southeast, and even longer if the market for thinning products is down. Wildlife benefits generally begin to decline within 5 years of planting; thus, pre

- commercial thinning ( thinning products not sold) may be necessary to maintain or improve habitat benefits. Providing 50

- percent cost

- share for thinning could increase the use of pre

- commercial and commercial thinning, providing environmental benefits.

Thinning costs are difficult to estimate because they depend on age of the stand, labor

2 Cost

- sharing for tree thinning was allowable prior to passage of the 2008 Farm Bill, but FSA policy required that rental payments be withheld the year thinning occurred. This assessment assumes that rental payments are not withheld the year of thinning.

- 5

-availability, and the extent of thinning. Alabama has a cost

- share program to encourage thinning of pine stands to control disease in which it pays $50 per acre, implying a cost of $100 per acre, if the cost

- share is 50 percent. A South Carolina financial analysis estimates thinning costs at $150 per acre (for stands at least 20 years old) , implying a

cost

- share of around $75 per acre (assuming 50

- percent cost

- share) . FSA employees with forestry backgrounds believe th ese estimates are on the low side, so an average cost

share payment of $100 per acre is used for estimating costs.

As of September 2008, CRP tree plantings cover ed about 3.3 million acres, including 2.0 million acres in the Southeast and Delta regions (Table 3). This tota l includes windbreaks, shelterbelts, and wetland and riparian plantings for which thinning is generally not a recommended management practice. Subtracting these acres leaves 2.2 million acres, including 1. 7 million acres in the Southeast and Delta regions

.

Table 3. Tree Plantings in CRP, September 2008 (Acres).
Region All Tree Practices Candidate Tree Acres *

Northeast 54,411 10,752
Appalachian 192,967 124,664

Southeast 883,915 785,660

Delta States 1,142,018 879,146

Corn Belt 397,648 171,698

Lake States 395,745 151,635

No. Plains 101,446 10,491

So. Plains 34,396 9,975

Mountain 30,943 8,848

Pacific 50,915 6,631

U.S. 3,281,402 2,159,500

* Excludes tree plantings such as field windbreaks and shel terbelts, riparian buffers, and

wetland restorations.

It is difficult to estimate participation rates, because it is not known how many of these acres may have already been thinned or were planted at rates such that thinning is not

needed . Further , many contract

- holders would not participate even if cost

- share is provided. A $100 per

- acre cost

- share means a $100 per acre net out

- of

- pocket expense

for the contract

- holder, a cost that may not yield economic benefits for many years.

For estimation purposes, a 25

- percent particip ation rate (550,000 acres over 5 years ) is assumed. Technical assistance costs are assumed to be $10 per acre, based on the current payment rate for forestry practices in CRP of $22 per acre. This $22 includes costs for developing the entire forestry pla ns, including site preparation, tree planting, and maintenance. Table 4 shows the enrollment assumptions by year for this and the other

- 6

-program components discussed in this CBA.

Using these estimates and assumptions, program costs would total $60.5 milli on, including $55.0 million for cost

- share and $5.5 million for technical assistance. See the

a ppendix for details of the cost estimation process.

Table 4. Enrollment Assumptions by Fiscal Year of Sign

- up (Acres) *

2009 2010 2011 2012 2013 Total

Tree Thinning 50,000 166,667 166,667 166,667 0 550,000

Aquaculture Ponds 8,700 8,700 8,700 8,700 8,700 43,500

Flooded Farmland 20,000 20,000 20,000 20,000 20,000 100,000

Constructed Wetlands 320 640 1,280 2,560 3,200 8,000

*Note: En rollment levels are generally assumed to be the same each year. A reduced acreage is

assumed in the first year for tree thinning because there is less financial incentive tha n there is for aquaculture ponds and flooded farmland. Constructed wetlands take a long time to enroll because they involve multiple land owners and extensive engineering before enrollment can occur. Thinning acres drops to $0 in 2013 because payments are only authorized through 2012.

Economic Impacts

. F or participating farmers, inc omes could decline in the short

- term, but would likely increase in the long

- term, as the economic benefits w ould not occur for the most part for many years. However, if thinning increases hunting values, incomes of

contract

- holders could be enhanced throu gh fee hunting, partially or fully offsetting the

out

- of

- pocke t thinning costs. In addition, i f thinning attracts wildlife and increases recreation such as hunting and wildlife viewing, local economies could benefit.

G . Revised Pilot Program for E nrollment of Wetland and Buffer Acreage in

Conservation Reserve.

In General

The 2008 farm bill replaced the Farmable Wetland Program (FWP) in its entirety with new language and dropped the Farmable Wetland Program as a name. For this

assessme nt, as well as in the interim rule, the old name is used for ease of discussion. New eligibility categories were added, including aquaculture ponds, flooded farmland, constructed wetlands, and non

- floodplain wetlands, and are discussed in the following

se ctions. The legislation also provides for appropriate buffers for each of the wetland categories.

Aquaculture Ponds

Lands that were devoted to commercial pond

- raised aquaculture production at some time

- 7

-between 2002 and 2007 are eligible. According to t he National Agricultural Statistics Service ( NASS ) data, about 366,000 acres were under water and devoted to commercial freshwater aquaculture in 2005, of which about 174,000 acres were devoted to catfish production. The remaining 192,000 acres included 7 6,000 acres of cropland used for crawfish production in Louisiana and 116,000 acres of other types of aquatic species. Since 1998, land used for species other than catfish increased more rapidly than for catfish ( 40,000 acres compared with 5,000 acres )

. After peaking in 2002 at 198,000 acres, catfish production has been decreasing due to the combined effects of loss of market share to imports and increasing feed costs , and i n 2007, NASS estimated that 163,000 acres were used for catfish production (and we re under water). Thus, while eligibility is not limited to catfish ponds, lands formerly used for catfish production are expected to make up the bulk of the acres t hat will enroll in this program, and analyzing the impacts based on catfish “acres ” is assu med to capture the costs and benefits.

Catfish 3 imports totaled 14,000 m etric tons (mt) in 2001, increasing to 38,000 mt in 2006. It is estimated, using NASS data, that land devoted to catfish production declined about 32,000 acres between 2001 and 2007 (Table 5). If this pattern continues through 2011, then about 58,000 acres could become eligible in States with declining acreage , of which 52,000 acres are in Arkansas, Louisiana, and Mississippi.

Table 5. Change in Pond Acreage Used for Catfish Produc tion.

State 2001 Acres 2007 Acres Change from
2001 to 2007 Change from
2001 to 2011 *

Alabama 24,400 23,700

- 700

- 1,200

Arkansas 36,000 30,400

- 5,600

- 9,300

California 2,400 1,500

- 900

- 1,500

Florida 680 530

- 150

- 250

Georgia 1,200 1,100

- 100

- 200

K entucky 260 370 +110 +200

Louisiana 13,300 6,300

- 7,000

- 11,700

Mississippi 112,700 94,000

- 18,700

- 31,200

Missouri 2,090 1,100

- 990

- 1,650

North Carolina 1,400 2,000 +600 +1,000

Texas 600 1,700 +1,100 +1,800

Other States 390 330

- 60

- 100

U.S. Total 195,400 163,000

- 32,400

- 54,720

States with Declining Acres 193,160 158,960

- 34,200

- 57,730
* Assuming continuation of ‘01 to ‘07 pattern.

3 Includes Basa , which are no longer classified as catfish, based on Department of Commerce rules.

- 8

-Eligible lands are mostly located in low lying areas of the lower Mississippi River basin, including the low er Mississippi River alluvial valley, one of the most important waterfowl wintering areas on the North American continent. One potential benefit of

enrollment is the provision of valuable migratory waterfowl habitat, if sufficient water

levels of enrolled lands are maintained. Wintering shorebirds and other migratory waterfowl will benefit, as will amphibians and other aquatic and wetland species. Renovating defunct catfish ponds into managed wetlands is believed to be a cost

effective way to produce exc ellent habitat for wintering waterfowl and migratory shore and wading birds because the required water control structures would already be in place. If water levels are not maintained, lands could be allowed to dry out and vegetation, such

as hardwood tre es, grasses, and wildlife food plots could be established. This alternative approach would provide wildlife and carbon sequestration benefits.

Buffers around the former ponds are eligible to be enrolled if they are determined to be needed to protect the wetland enrolled. Typically, aquaculture ponds are in groups with not much land between them, so buffers would probably not encompass large amounts of land. If buffer acreage were to equal 50 percent of the wetland size, the 58,000 former

pond acres woul d be accompanied by 29,000 buffer acres and a total of 87,000 acres would have a potential to be enrolled. Assuming a 50

- percent participation rate, total outlays are estimated to be $30.2 million through FY 2018 (Table 1). U sing a rental payment of $70 per acre (based on rental rates of around $70 in high

- aquaculture production counties), rental payments would amount to $18.3 million through FY 2018. Using the estimated average cost of CRP riparian and wetland practices, cost

- share payments would be $2. 2 million, and incentive payments would total $9.7 million. Details of the estimation process are provided in the appendix.

Economic Impacts . Participating owner and operator incomes will benefit from the rental payments. They may also be able to earn additional income from leasing the land for hunting, as these lands could attract large numbers of ducks and geese, if water levels are maintained. Adverse local economic impacts could occur if the program encourages or accelerates the abandonment of aqua culture ponds, leading to lower employment and economic activity. However, local economies would benefit if additional hunters or

wildlife viewers visit the area.

Flooded Farmland

To be eligible, land must have been, during 1990 through 2002, (1) subjec t to overflow of

a closed

- basin prairie wetland and (2) cropped in at least 3 of 10 years during the period

. Enrollment of wetland per tract cannot exceed 20 acres, and suitable upland buffers are allowed. Because of this size restriction and eligibility being limited to lands inundated with water in the prairie pothole region, enrollment is expected to be quite low.

Using U.S. Fish and Wildlife Service geographic information system data, the estimated

- 9

-land under water in the prairie pothole region was 200,000 acres higher in 2007 than it

was in the mid

- 1990's. Because this is the only estimate available, it is used as guidance in estimating potential costs. Most of this land is located in eastern North and South

Dakota. These lands would include so me land that did not have an adequate cropping history. In addition, some of the land would exceed the 20

- acre per tract wetland limit. For this assessment, we assume , at a maximum, that 100,000 acres would be enrolled, including both wetland and buffer (Table 4 contains the year

- by

- year enrollment assumptions). Costs through FY 2018 of enrolling these acres are estimated at $58.6 million, including $30.0 million in rental payments, $7.0 million for cost

- share payments, and $21.6 million in incentive pay ments. Technical assistance costs are an estimated $6.3 million. Details are in the appendix.

The benefits of enrolling flooded lands and adjacent buffers are two

- fold. First, the

environment would benefit from the buffers which protect the wetlands fro m degradation by agricultural activity in adjacent lands and from the additional wildlife habitat that would be created when the buffers are established. Second, farm incomes would be enhanced by the rental payments, especially for the payments on lands u nder water because little or no income is currently being generated from these lands.

Economic Impacts . As with aquaculture pond enrollment, owner s and operator s may also be able to earn additional income from leasing the land for hunting, as these lands are expected to attract large numbers of waterfowl. A minimal amount of spending for establishing vegetative cover on the buffers would benefit local economies. Additionally,

local economies would benefit if additional hunters or wildlife viewers visit the area.

Constructed Wetlands

The 2008 Farm Bill adds another new eligibility category within FWP, constructed wetlands. These lands are designed to intercept drainage water from cropland, reducing

the amount of nutrients and sediment that reach surfac e and ground water. Enrolled lands will be largely in areas of the country with intensively drained cropland, such as Iowa and Illinois. This practice is currently being applied under the Iowa Conservation Reserve Enhancement Program (CREP). The Iowa CR EP currently has 471 constructed wetlands contracts covering 1,335 acres. Tile

- drained cropland area treated by each constructed wetland acre range from 25 to 100 acres in size.

Offsite and onsite benefits are quite high for these wetlands accompanying b uffers. They remove large amounts of nitrate and provide valuable wildlife habitat. Iowa State University researchers report that these wetlands provide a cost

- effective means of reducing nitrate loads in Iowa’s surface waters. According to monitoring d ata from Iowa, these wetlands remove between 40 percent and 90 percent of the nitrate flowing into them, an average of 5 tons of nitrate per year per site. Total costs of $1.38 per pound of

nitrate removed are 23 percent of the $5.89 per pound cost that t he National Oceanic and Atmospheric Administration estimated addressing Gulf of Mexico hypoxia would cost.

- 10

-Iowa’s constructed wetlands are also providing other benefits, including enhancement of wildlife habitat, sequestration of carbon, and flood

- water re tention.

Lands converted to wetland s under this practice do not need to have any cropping history, but are limited to 40 acres per tract. Appropriate buffers can be enrolled without size restrictions. The average Iowa CREP wetland is 28 acres, includi ng both wetland and

non

- wetland buffer, so the 40

- acre wetland limit is not expected to significantly restrict enrollment. In addition, if land meets certain cropping history criteria, it can be enrolled

under other non

- FWP CRP practices.

If 250 wetlands are constructed at an average size of 28 acres , costs are estimated to total $41.9 million through FY 2018. Included in this total are $8.1 million for rental payments, $13.2 million for cost

- share payments, $13.0 million for incent ive payments, and $7.5 million in technical assistance costs. Details are in the appendix.

Floodplain and Non

- Floodplain Wetland Restorations

Most floodplain and non

- floodplain wetlands that could be restored under FWP provisions could also be enrolled under other existing CRP practices, which receive the same payments, but are not restricted to 40 wetland acres per tract as are FWP enrollments. The only lands that would be eligible for FWP enrollment that are not eligible under other CRP wetland provis ions would be lands that meet the 3 of 10 year FWP cropping requirement, but not the 4 of 6 year (prior to 2008) cropping history required for other CRP cropland enrollments, while still meeting the 40 acre or less requirement . Determining how much of an effect this will have on enrollment would be very difficult and is not attempted for this assessment , and i s believed to have very minimal impact on restorations of floodplain and non

- floodplain wetlands in CRP.

The a ppendix includes a table showing the d istribution of wetland restoration acres enrolled in CRP by practice category and region , as well as a summary of CRP’s legislative and programmatic history

.

- 11

-

## References

Smith, N. And C. Beckham. 2007. Financial Analysis of Pre

- commercial Thinning, Low

Density Planting, and Cost Share Payments. South Carolina Forestry Commission. 5 pp.

North Carolina Cooperative Extension Service. 2005. Woodland Owner Notes: Developing Wildlife

- Friendly Pine Plantations . WON

- 38. 7 pp.

Allen, A.W., Y. K. Bernal, a nd R. J. Moulton. 1996. Pine Plantations and Wildlife in the Southeastern United States: An Assessment of Impacts and Opportunities. U. S. Department of the Interior, National Biological Service. Information and Technology Report 3. 40 pp.

Alabama For estry Commission. Southern Pine Beetle Prevention Program description on

website: http://www.forestry.state.al.us/SPB

- CostShare.aspx.

U. S. Department of Agriculture. National Agricultura l Statistics Service. 2005. Census of Aquaculture.

U. S. Department of Agriculture. National Agricultural Statistics Service. Catfish Production reports on website: http://www.nass.usda.gov /QuickStats/index2.jsp.

North American Waterfowl Management Plan, Plan Committee. 2004 Implementation Framework: Strengthening the Biological Foundation . Canadian Wildlife Service, U. S. Fish and Wildlife Service, Secretaria de Medio Ambiente y Recursos Naturales, 106 pp.

Mississippi State University Extension Service. 2008. Catfish

- Duck Ponds for the Mississippi

Delta . Pub. 2482. 4 pp.

Crumpton, W., G. Stenback, B. Miller, and M. Helmers. 2006. Potential Benefits of Wetland Filters for Tile Draina ge Systems: Impact on Nitrate Loads to Mississippi River Subbasins

. Washington DC: USDA. 34 pp. http://www.fsa.usda.gov/Internet/FSA_File/fsa_final_report_crumpton_r hd.pdf

Iovanna, R., S. Hyberg, and W. Crumpton. 2008. Treatment wetlands: Cost

- effective practice for intercepting nitrate before it reaches and adversely impacts surface waters. J. Soil and Water Conservation. 63(1): 14A

- 15A.

U.S. Department of Agr iculture. Farm Service Agency. 2008. Cost

- Benefit Assessment of Payment Limit and Payment Eligibility Provisions in the Food, Conservation, and Energy Act of

2008. Draft. 12 pp.

- 12

-

### Appendix 1

– Cost Estimates

Tree Thinning

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Enrollment

Acres 50,000166,667166,667166,667

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 09-'12 '13-'18 09-'18 Cost-share ($1,000) ($100 per acre)

2009 $1,667$1,667$1,667$5,000$0$5,000

2010 $5,556$5,556$5,556$16,667$0$16,667

2011 $5,556$5,556$5,556$11,111$5,556$16,667

2012 $5,556$5,556$5,556$5,556$11,111$16,667 $1,667$7,222$12,778$16,667$11,111$5,556$0$0$0$0$38,333$16,667$55,000

Technical Assistance ($1,000) ($10 per acre)

2009 $500$1,667$1,667$1,667$5,500$0$5,500

Total ($1,000) $2,167$8,889$14,444$18,333$11,111$5,556$0$0$0$0$43,833$16,667$60,500

Page 13Aquaculture Ponds

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Enrollment
2010 8,7008,7008,7008,7008,7008,7008,7008,7008,700
2011 8,7008,7008,7008,7008,7008,7008,7008,700
2012 8,7008,7008,7008,7008,7008,7008,700
2013 8,7008,7008,7008,7008,7008,700
2014 8,7008,7008,7008,7008,700

Cost-share ($1,000) ($50/acre)

2010 $261$131$44

2011 $261$131$44

2012 $261$131$44

2013 $261$131$44

2014 $261$131$44 $0$261$392$435$435$435$174$44$0$0

Rental ($1,000) ($70/acre)

2010 $609$609$609$609$609$609$609$609

2011 $609$609$609$609$609$609$609

2012 $609$609$609$609$609$609

2013 $609$609$609$609$609

2014 $609$609$609$609 $0$0$609$1,218$1,827$2,436$3,045$3,045$3,045$3,045

SIP ($1,000) ($100/acre)

2010 435435
2011 870
2012 870
2013 870
2014 870 $435$1,305$870$870$870$0$0$0$0$0

$1,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 '09-'12 '13-'18 '09-'18

Cost-share $0$261$392$435$435$435$174$44$0$0$1,088$1,088$2,175

Rental $0$0$609$1,218$1,827$2,436$3,045$3,045$3,045$3,045$1,827$16,443$18,270

SIP $435$1,305$870$870$870$0$0$0$0$0$3,480$870$4,350

PIP $0$209$313$348$348$348$139$35$0$0$870$870$1,740

Annual 20% $0$0$122$244$365$487$609$609$609$609$365$3,289$3,654

Tech. Ass't. $290$290$290$290$290$0$0$0$0$0$1,160$290$1,450

Total $725$2,065$2,596$3,405$4,135$3,706$3,967$3,732$3,654$3,654$7,630$22,559$30,189

Page 14Flooded Farmland

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Enrollment (Acres)
2010 20,00020,00020,00020,00020,00020,00020,00020,00020,000
2011 20,00020,00020,00020,00020,00020,00020,00020,000
2012 20,00020,00020,00020,00020,00020,00020,000
2013 20,00020,00020,00020,00020,00020,000
2014 20,00020,00020,00020,00020,000

Cost-share ($1,000) ($70/acre)

2010 $840$420$140

2011 $840$420$140

2012 $840$420$140

2013 $840$420$140

2014 $840$420$140 $0$840$1,260$1,400$1,400$1,400$560$140$0$0

Rental ($1,000) ($50/Acre)

2010 $1,000$1,000$1,000$1,000$1,000$1,000$1,000$1,000

2011 $1,000$1,000$1,000$1,000$1,000$1,000$1,000

2012 $1,000$1,000$1,000$1,000$1,000$1,000

2013 $1,000$1,000$1,000$1,000$1,000

2014 $1,000$1,000$1,000$1,000 $0$0$1,000$2,000$3,000$4,000$5,000$5,000$5,000$5,000

SIP ($1,000) ($100/Acre)

2010 $1,000$1,000

2011 $2,000

2012 $2,000

2013 $2,000

2014 $2,000 $1,000$3,000$2,000$2,000$2,000$0$0$0$0$0

$1,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 '09-'12 '13-'18 '09-'18

Cost-share $0$840$1,260$1,400$1,400$1,400$560$140$0$0$3,500$3,500$7,000

Rental $0$0$1,000$2,000$3,000$4,000$5,000$5,000$5,000$5,000$3,000$27,000$30,000

SIP $1,000$3,000$2,000$2,000$2,000$0$0$0$0$0$8,000$2,000$10,000

PIP $0$672$1,008$1,120$1,120$1,120$448$112$0$0$2,800$2,800$5,600

Annual 20% $0$0$200$400$600$800$1,000$1,000$1,000$1,000$600$5,400$6,000

Tech. Ass't $600$600$600$600$600$0$0$0$0$0$2,400$600$3,000

Total $1,000$4,512$5,468$6,920$8,120$7,320$7,008$6,252$6,000$6,000$17,900$40,700$58,600

Page 15Constructed Wetlands

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Enrollment
2010 320320320320320320320320320
2011 640640640640640640640640
2012 1,2801,2801,2801,2801,2801,2801,280
2013 2,5602,5602,5602,5602,5602,560
2014 3,2003,2003,2003,2003,200

Cost-share ($1,000) ($1,659/Acre)

2010 $319$159$53

2011 $637$319$106

2012 $1,274$637$212

2013 $2,548$1,274$425

2014 $3,185$1,593$531 $0$319$796$1,646$3,291$4,672$2,017$531$0$0

Rental ($1,000) ($200/Acre)

2010 $64$64$64$64$64$64$64$64

2011 $128$128$128$128$128$128$128

2012 $256$256$256$256$256$256

2013 $512$512$512$512$512

2014 $640$640$640$640 $0$0$64$192$448$960$1,600$1,600$1,600$1,600

SIP ($1,000/Acre) ($100/Acre)

2010 1616
2011 64
2012 128
2013 256
2014 320 $16$80$128$256$320$0$0$0$0$0

$1,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 '09-'12 '13-'18 '09-'18

Cost-share $0$319$796$1,646$3,291$4,672$2,017$531$0$0$2,761$10,511$13,272

Rental $0$0$64$192$448$960$1,600$1,600$1,600$1,600$256$7,808$8,064

SIP $16$80$128$256$320$0$0$0$0$0$480$320$800

PIP $0$255$637$1,317$2,633$3,737$1,614$425$0$0$2,208$8,409$10,618

Annual 20% $0$0$13$38$90$192$320$320$320$320$51$1,562$1,613

Tech. Ass't. $300$600$1,201$2,401$3,002$0$0$0$0$0$4,502$3,002$7,504

Total $316$1,254$2,839$5,850$9,784$9,561$5,551$2,876$1,920$1,920$10,259$31,612$41,870

Page 16

### Appendix 2

– CRP Background

CRP En rollment by Sign

- up Type, September 2008 (Acres)

Region General Continuous
Total Non

- CREP CREP FWP Total

Northeast 102,648 15,978 289,918 5 305,901 408,549
Appalachian 565,429 116,146 148,951 0 265,098 830,527

Southeast 920,752 140,968 0 0 140, 968 1,061,371

Delta States 1,075,752 312,195 56,421 0 368,617 1,444,368

Corn Belt 3,581,435 1,069,374 263,901 74,599 1,407,873 4,989,309

Lake States 2,015,287 321,122 193,798 39,814 554,734 2,570,020

No. Plains 7,986,409 551,254 72,700 67,521 691,475 8 ,677,884

So. Plains 4,855,248 65,759 79 0 65,838 4,921,087

Mountain 7,355,344 143,067 50,739 140 193,945 7,549,290

Pacific 2,083,985 128,872 50,203 0 179,075 2,263,060

U.S. 30,541,941 2,864,736 1,126,710 182,078 4,173,524 34,715,465

Note: Rows and columns may not sum due to rounding.

Wetland Restoration Practices in CRP, Wetland and Buffer, September 2008 (Acres)

Region Floodplain
and Non

floodplain
Wetlands Bottomland
Hardwood
Trees Duck Nesting
Habitat Farmable
Wetland Program Other Total

No rtheast 3,931 4 0 5 3,067 7,007
Appalachian 3,319 3,005 0 0 6,867 13,191

Southeast 668 781 0 0 2,176 3,625

Delta States 87,102 31,094 235 0 5,508 123,939

Corn Belt 122,751 6,002 88 74,599 33,491 236,930

Lake States 359,132 239 1,616 39,814 12,230 413, 030

No. Plains 1,037,606 133 36,511 67,521 18,079 1,159,850

So. Plains 11,059 779 0 0 314 12,152

Mountain 6,913 0 0 140 359 7,411

Pacific 9,225 0 0 0 757 9,982

U.S. 1,641,705 42,037 38,451 182,078 82,848 1,987,119
Note: Rows and columns may not s um due to rounding.

USDA Farm Production Regions

Region States

Northeast Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont
Appalachian Kentucky, North Carolina, Tennessee , Virginia, West Virginia

Southeast Alabama, Florida, Georgia, South Carolina, Puerto Rico

Delta States Arkansas, Louisiana, Mississippi

Corn Belt Illinois, Indiana, Iowa, Missouri, Ohio

Lake States Michigan, Minnesota, Wisconsin

No. Plains Kansas, Nebraska, North Dakota, South Dakota

So. Plains Oklahoma, Texas

Mountain Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming

Page 17Pacific Alaska, California, Hawaii, Oregon, Washington

Legislative and Programmatic History of CRP

Title XII of the Food Security Act of 1985 established the CRP to assist owners and operators in conserving and improving soil, water, and wildlife resources on their farms and ranches by converting highly erodible and other environmentally sensitive cropland and marginal pasture to long

- term resource conserving covers. In exchange for annual rental payments and cost

- share assistance of up to 50 percent of cover establishment costs, agricultural landowners and operators agree to establish and maintain an approved permanent cover on enrolled acreage for 10 to 15 years. The Act directed the Department of Agriculture (USDA) to enroll 40 to 45 million acres by 1990 with a primary goal to reduce soil erosion on highly erodible cropland. Secondary objecti ves included protecting the Nation's long

- run capability to produce food and fiber, reducing sedimentation, improving water quality, fostering wildlife habitat, curbing production of surplus commodities, and providing income support for farmers.

The Food, Agriculture, Conservation, and Trade Act of 1990 extended CRP through 1995 and expanded types of land eligible for enrollment to include lands that could reduce on

- site or off

site threats to water quality if removed from production. Following passage, U SDA’s Farm Service Agency (FSA) adopted new rental payment caps based on soil

- specific productivity based rental rates and developed an environmental benefits index (EBI) to rank offers.

The Federal Agriculture Improvement and Reform Act of 1996 re

- author ized CRP enrollment through 2002 and set a maximum enrollment of 36.4 million acres at any one time. The EBI was revised to explicitly include a wildlife benefits component, which was given equal weight with soil erosion and water quality benefits.

Also in 1996, FSA initiated enrollment of selected practices, such as filter strips and riparian buffers, on a continuous basis without competition. An annual incentive payment equal to 20 percent of the annual rental rate was provided for many of these practi ces. In 1997, FSA created the Conservation Reserve Enhancement Program ( CREP ), further advancing CRP’s environmental targeting. CREP authorizes State

- Federal conservation partnerships that address specific State and nationally significant water quality, soil erosion, and wildlife habitat concerns related to agriculture. CREP enrollment is held on a continuous basis. Enrollment may include both general and continuous sign

- up practices, and additional financial incentives are generally provided. In 2000, up

- front signing and practice incentives were established to further enhance continuous enrollment, including CREP.

The FY 2001 Agriculture Appropriations Act established FWP, which provided for non

competitive enrollment under continuous sign

- up provi sions and incentives for up to 500,000

acres of small non

- flood plain wetlands and adjacent upland in 6 States (Nebraska, Iowa, Minnesota, North Dakota, South Dakota, and Montana).

The Farm Security and Rural Investment Act of 2002 extended CRP enrollmen t authority through 2007 and increased the enrollment cap by 2.8 million acres to 39.2 million acres. Basic cropland eligibility is re

- defined to be land that has been cropped or considered cropped in at

Page 18least 4 of the 6 years preceding enactment. Previo usly, basic cropland eligibility required cropping in at least 2 of the 5 years preceding sign

- up. Practices eligible under marginal pasture criteria, which have no cropping requirement, were expanded to permit appropriate vegetative covers, rather than r equiring the land be planted only to trees. Other changes include extending eligibility to field remnants made infeasible to farm where buffer practices are enrolled, cropland where enrollment would provide water conservation benefits, and land subject to expiring CRP

contracts.

The Act also expanded FWP from the original six States to all States and raised the enrollment cap to 1,000,000 acres, while keeping the 100,000 acre State maximum. While maximum wetland size is increased to 10 acres, only 5 acre s are eligible to receive rental payments. The

per

- State 100,000 acre limit may be raised to 150,000 acres after review. In addition, managed harvesting of forage (subject to the requirement that environmental benefits be maintained or enhanced) was allo wed. For CR P in general, equal consideration was required to be given to soil erosion, water quality, and wildlife benefits.

The Food, Conservation, and Energy Act of 2008 extended CRP enrollment authority to September 30, 2012, but requires that enroll ment be reduced to at least 32 million acres by October 1, 2009. The crop history requirement is updated to 4 of 6 years between 2002 and 2007, and alfalfa and other multi

- year grasses and legumes in rotation may contribute to cropping history. The Act a lso expanded FWP eligibility, provided cost

- share for tree thinning,

and provides for incentives to encourage transition of expiring CRP lands to beginning or socially disadvantaged farmers and ranchers. The 25

- percent county cropland limit may be

waived to allow enrollment of continuous and CREP contracts.

Page 19