Conservation Reserve Program: Alternatives Are Available for Managing Environmentally Sensitive Cropland
Released: 1995-02-21T00:00:00

Letter

Introduction

If not properly managed, agricultural production on the nation’s 382 million acres of cropland can adversely affect water and air quality, long-term soil productivity, and the availability of wildlife habitat. The Conservation Reserve Program (CRP), first enacted in 1985, was designed in part to address these problems. Under the CRP, the U.S. Department of Agriculture (USDA) entered into 10- to 15-year voluntary contracts with farmers to remove highly erodible cropland from production and establish a cover crop on it in return for annual federal rental payments. From 1986 to 1992, 36.4 million acres—almost 10 percent of the nation’s cropland—were removed from production under 375,000 CRP contracts at an estimated total outlay of $19.5 billion through 2002.

In October 1995, contracts for the first 2 million acres enrolled in the CRP will expire. Contracts on approximately 22 million additional acres will expire in 1996 and 1997; the remaining contracts will expire by the end of 2002. The prospect of the return of these lands to crop production has raised several concerns, especially the loss of environmental protection afforded by the CRP.

The CRP’s Goals Have Evolved

The CRP’s goals have changed in response to the nation’s environmental concerns. The Congress initially authorized the CRP in the Food Security Act of 1985 and mandated USDA to retire 40 million to 45 million acres of highly erodible cropland from production by 1990 to improve the environment (focusing on reducing soil erosion), reduce excess supplies of commodities, and support farm income. On the basis of these 1985 goals, USDA enrolled nearly 34 million acres by 1990, principally in the Great Plains and Mountain states. These acres are subject primarily to erosion caused by wind rather than by water. Although both forms of erosion can result in reduced agricultural productivity, water-caused erosion generally results in greater off-site water quality, recreation, and wildlife damages.

To improve the environmental benefits achieved by the CRP, the Congress emphasized the program’s water quality goals when it reauthorized the CRP in the Food, Agriculture, Conservation and Trade Act of 1990. Consequently, the last 2.5 million acres that were enrolled—between 1990 and 1992—were concentrated in the Corn Belt and Lake states, where cropland is subject primarily to water-caused erosion.

How the CRP Operates

USDA’s Agricultural Stabilization and Conservation Service (ASCS) administers the CRP in cooperation with the Department’s Soil Conservation Service (SCS) and Extension Service, state forestry agencies, and local soil and water conservation districts. Acres covered in the CRP have to meet certain criteria established in the legislation and through regulation. ASCS held periodic signup periods during which farmers could offer the number of acres they wished to voluntarily enroll in the CRP for a period of 10- to 15-years and their desired rental payment.

CRP Enrollment Criteria

Initially, only highly erodible land that had been planted for 2 of 5 years during a specified period prior to enrollment met the enrollment criteria for this program. Generally, two-thirds of the field had to be highly erodible in order for the whole field to be enrolled. The normal practice was to enroll the entire field instead of just the portion of the field that was highly erodible. Beginning with the sixth signup period in 1988, ASCS expanded enrollment criteria to allow partial-field enrollment of grass or tree strips 66- to 99-feet wide bordering waterways, without regard to erodibility. ASCS also allowed other types of partial-field enrollments, such as public water wellhead areas, beginning with the tenth signup period in 1991. Although USDA allowed some partial-field enrollments, the vast majority of CRP enrollments continued to be whole field enrollments.

In return for keeping land out of production, farmers receive federal rental payments on the CRP acreage and reimbursement for 50 percent of the cost they incur to establish a permanent cover crop, such as grass, on those acres. The rental payment amount is determined by the landowner’s “bid”—the amount of money the farmer is willing to accept to retire the land—provided that the bid is within established ASCS payment limits and other enrollment criteria are met.

CRP Bid Process

ASCS has used two different methods to evaluate bids for CRP enrollment. From 1986 to 1990, for nine signups, ASCS evaluated bids using the “maximum acceptable rental rate” method. Under this method, if the farmer’s bid was at or below the rate that ASCS established for that area and the land met the enrollment criteria described above, the acreage was enrolled. This approach met with criticism because (1) it did not target a broad range of environmentally sensitive land and (2) after the first few signups, farmers were able to determine the maximum acceptable rental rate and often submitted bids that were more than the land’s actual market rental rate but less than USDA’s maximum rate for that region.

In 1990, the Congress reauthorized the CRP and directed USDA to give priority to future CRP enrollments in areas where crop production is most likely to impact water quality. This instruction caused ASCS to turn to another method for evaluating bids. ASCS compared all bids in signup periods 10 through 12 (1991 and 1992) to the market rental rate for comparable land in the same region. Bids that were less than or equal to this rate were then evaluated using a measure of environmental benefits developed by USDA known as the Environmental Benefits Index (EBI). This index calculates seven potential environmental and other factors associated with the land on which farmers were offering CRP bids—surface water quality, groundwater quality, soil productivity, conservation compliance assistance, tree planting, Water Quality Initiative areas, and conservation priority areas—in relation to the federal costs of enrolling that land. Although USDA officials and environmental groups generally support the EBI as an improvement in the CRP enrollment process, they also agree that the EBI could include more environmental benefits, such as air quality and wildlife habitat. USDA is currently considering revisions to the EBI for any future land retirement program.

Current Status of the CRP

Currently, 36.4 million acres are enrolled in the CRP. As figure 1.1 shows, most of the CRP acres—22 million—are enrolled in the Great Plains and Mountain states.

Table 1.1 shows, by region, the number of acres enrolled in the CRP and rental payments. The 22 million acres in the Great Plains and Mountain states account for 60 percent of all CRP land but only 51 percent of all CRP payments. This difference reflects the generally lower rental rates in these areas.

Through 2002, the federal government will have spent an estimated $19.5 billion for the CRP—approximately $18.1 billion in rental payments and $1.4 billion in cost-share payments to establish a cover crop on CRP land. The government’s cost for the CRP is partially offset by a reduction in commodity payments that USDA would have otherwise paid on wheat, corn, barley, and other commodity acres enrolled in the CRP. A 1990 GAO report found that estimates of this offset vary depending on the assumptions made, such as the productivity of CRP land and how other acreage set-aside programs might have operated in the absence of the CRP. USDA has estimated the offsetting commodity program savings to be about 50 percent of total CRP outlays.

Farmers can choose a variety of cover crops for their CRP acreage. Approximately 82 percent of CRP acres—30 million—have been planted in grass. These acres could be converted to crop production once the contracts expire. Another 2.4 million acres have been planted to trees, about one-half of the CRP’s tree-planting goal. These acres are less likely to return to cultivated crop production. The remaining 4 million CRP acres are devoted to other conservation practices, including wildlife ponds and food plots, landscape structures such as grassed waterways, filter strips, and windbreaks.

Contracts for the first 2 million acres will expire in October 1995.However, the majority of CRP acres—22 million—will be eligible to return to production in 1996 and 1997. Figure 1.2 shows the scheduled expiration dates for the contracts by acreage and major commodity.

The CRP Provides Benefits, but GAO Has Questioned Its Cost-Effectiveness

The CRP has reportedly achieved substantial environmental benefits. For example, the Department of the Interior estimated that the CRP will provide a total of $13.4 billion in environmental benefits over the program’s life: $3.1 billion for water quality, $400 million for air quality, $1.3 billion in preserved soil productivity, $3.1 billion for small game hunting, $4.1 billion for nonconsumptive wildlife, and $1.4 billion for waterfowl hunting.

These estimates, however, are based on a 1992 USDA estimate of soil erosion reductions on CRP land of almost 700 million tons per year. More recent USDA estimates derived from National Resources Inventory (NRI) data indicate that soil erosion has been reduced by only one-half of this estimate—about 370 million tons annually.

Our reports have found that the CRP could have been more cost-effective for environmental benefits. For example, these evaluations point out that the CRP could have provided more environmental benefits for the same amount of federal expenditure if USDA had emphasized the program’s water quality goals. These evaluations note that USDA focused primarily on meeting mandated acreage goals that were established for each signup, to the detriment of the program’s environmental goals.

Related USDA Programs

In addition to the CRP, more than 20 USDA programs address the environmental impacts of crop production. About one-half of these programs were introduced in 1985 and 1990. Most of these programs are voluntary and provide technical assistance, cost-share payments, and/or incentive payments to encourage conservation practices. Both farmers who receive USDA farm program benefits and those who do not can use these programs. Appendix I lists these programs and describes their basic environmental provisions.

Objectives, Scope, and Methodology

Concerned about the potential adverse environmental impact from crop production on expiring CRP acres and on other cropland acres, the Chairman and Ranking Minority Member of the Senate Committee on Agriculture, Nutrition, and Forestry asked us to (1) estimate the amount, and identify the location of, CRP land and other cropland that is environmentally sensitive and should be permanently removed from crop production to achieve environmental benefits; (2) identify ways to modify the CRP to more effectively remove this land from production; and (3) identify CRP land and other cropland that is environmentally sensitive but can be protected by conservation practices and stay in production. We were also asked to describe ways the federal government can encourage the use of these practices.

In response to the first objective, we (1) reviewed literature on agriculture’s effect on environmental quality and interviewed officials at USDA, the Environmental Protection Agency, the Fish and Wildlife Service in the Department of the Interior, representatives of farmers’ organizations, soil scientists, wildlife biologists, and agricultural economists to identify what factors determine environmental sensitivity, and (2) analyzed USDA’s NRI and CRP contract data bases, in cooperation with the SCS, to estimate the amount and identify the location of cropland that met USDA definitions of environmentally sensitive land for each factor. The NRI—a natural resource inventory sample compiled at 5-year intervals—is the federal government’s principal source of information on the status, condition, and trends of soil, water, and related resources for nonfederal lands and links this information to CRP land. Although we did not perform a reliability assessment of the NRI data base, we did review the methods used by SCS to ensure the accuracy and completeness of the data. We determined the data are reliable for our purposes. Appendix II contains confidence intervals for estimates presented in the text of this report and a statement of reliability for confidence intervals for the maps. Confidence intervals for individual hydrologic unit areas for each map have been prepared and are available upon request.

To respond to the second objective, we (1) reviewed relevant literature, including contract-holder surveys; (2) interviewed USDA staff, agricultural economists, soil scientists, and representatives of farm, conservation, environmental, and wildlife organizations; and (3) analyzed the recommendations of a USDA CRP task force.

We also applied the above methodologies to respond to the third objective. We conducted our work at USDA, the Environmental Protection Agency, and the Fish and Wildlife Service headquarters in Washington, D.C.; several USDA state and county offices; conservation and wildlife organizations’ offices; several universities; and an on-farm demonstration project. We conducted our work from June 1993 through November 1994 in accordance with generally accepted government auditing standards. We obtained written agency comments on a draft of this report. USDA’s comments and our evaluation of them appear in appendix IV.

Using Buffer Zones Can Reduce the Amount of Cropland Needed for Land Retirement

No comprehensive data are available to specifically identify the amount and location of CRP land and other environmentally sensitive cropland that should be removed from production for environmental benefits. However, depending on the environmental objectives established, only a small portion of CRP acres and other cropland may need to be removed from production. This is because the use of “buffer zones,” as well as other conservation practices such as reduced tillage, can mitigate the environmental degradation caused by crop production. Buffer zones are small portions of land that provide a buffer between fields in crop production and the surrounding environment. For example, if buffer zones were used on CRP land and other cropland to protect surface water—one of the five environmental sensitivity factors—only about 6 million acres would need to be removed from crop production. These acres are primarily located in the Corn Belt, Lake, Delta, and Appalachian states. The amount of buffer zone acres needed for groundwater, air, and soil protection would likely be less than the amount necessary for surface water and wetlands.

In addition to buffer zones, some wildlife species require large blocks of their native landscape. Therefore, if wildlife habitat enhancement is established as a major objective of a future CRP, much more land may be necessary than the amount needed for buffer zones.

While the Congress is considering reauthorizing the CRP, it could consider three modifications to the CRP that would provide longer-term environmental benefits at less cost. These modifications are (1) focusing the program more on creating buffer zones rather than on retiring whole fields of cropland; (2) allowing CRP participants to generate revenues by using CRP land in ways that do not impair the environment, such as restricted haying or grazing; and (3) purchasing easements which would restrict activities on the land for a substantial period, such as 30 years, or longer, for approximately the same cost to the federal government as the current 10-year contracts.

Buffer Zones Can Mitigate the Effects of Crop Production on Environmentally Sensitive Land

Land on which crop production can result in significant off-site and on-site environmental damages is considered environmentally sensitive. In identifying cropland that is environmentally sensitive, USDA and environment group officials we spoke with agree that five factors should be examined: surface water; groundwater; air; soil; and wildlife habitat. No comprehensive data are available to examine the effect of crop production on all factors simultaneously. Therefore, we used USDA data to estimate the amount of environmentally sensitive land nationwide for each factor. These estimates cannot be totaled because they are not mutually exclusive. The same land may be sensitive to several of the factors, such as surface water, groundwater, and wildlife habitat.

Recent research by USDA, the Environmental Protection Agency, and the National Research Council shows that dedicating small portions of fields to create buffer zones—relatively small plots of land that provide a buffer between fields in crop production and the surrounding environment—can provide substantial environmental benefits without removing whole fields from production. Buffer zones include (1) filter strips—typically 100-foot-wide strips of grass and trees around rivers, streams, lakes, and wetlands that border cropland; these strips prevent the majority of agricultural pollutants from reaching the water; (2) plots of grass surrounding public water wellheads to prevent chemicals from leaching into groundwater; (3) strips of trees and bushes that decrease wind velocity to reduce wind erosion; and (4) strips of vegetative cover—“wildlife corridors”—that connect already existing wildlife habitat areas.

To be most effective, buffer zones should be used in tandem with other conservation practices, such as reduced tillage, on cropland in production. For example, the National Research Council Board on Agriculture recently recommended the use of buffer zones as one component in soil and water quality improvement. In addition, USDA officials agree that removing whole fields from crop production may be justified in some limited cases when buffer zones and other conservation practices are not sufficient to mitigate the environmental effects of crop production on the field.

Buffer Zones Require That Only a Small Amount of CRP Land and Other Cropland Be Removed From Production

By using the buffer-zone approach to protect surface water and wetlands, only about 6 million acres nationwide—255,000 CRP acres and 5.5 million other cropland acres—would need to be removed from crop production.These acres would be placed in filter strips adjacent to surface water and wetlands.

Filter strips can improve the quality of (1) surface water and wetlands by removing sediment and chemicals from agricultural runoff, (2) groundwater by improving the quality of surface water that recharges groundwater aquifers, and (3) wildlife habitat for some species. For example, a USDA study found that filter strips reduce the amount of phosphorous and nitrogen that reaches surface water by 80 percent. In addition, improvements to surface water and wetlands often extend to maintaining groundwater quality because groundwater is frequently replenished by surface water and wetlands. Filter strips also provide habitat for wildlife that live near water and improve water quality for fish and other aquatic species.

Figure 2.1 shows that these 6 million acres are concentrated in the Corn Belt, Lake, Delta, and Appalachian states.

While the 6 million acres in filter strips to protect surface water and wetlands are relatively easy to identify, buffer zones could also be used to protect groundwater, air quality, and two types of wildlife habitat.However, while nationwide data are not available to estimate the amount of buffer zone acres necessary to protect the environment from these perspectives, USDA officials and environmental experts agree that the amount of acres needed is likely to be less than the 6 million acres needed to protect surface water because buffer zones are more appropriate for protecting surface water than for the other factors. The following describes how buffer zones could be used for the remaining environmental factors:

Groundwater. Grass buffer zones can protect areas where groundwater approaches the surface, such as where wells have been drilled for a public water supply or where groundwater is replenished with water from the surface through highly porous soils, by filtering water as it leaches from the surface into groundwater aquifers.

Air. Tree and bush buffer zones—windbreaks—can protect air quality by decreasing wind velocity, thereby reducing wind erosion.

Wildlife Habitat. Buffer zones can be used to protect the habitat of two types of wildlife. Wildlife that live near or in water would benefit from the buffer zones that improve surface water and wetlands quality. Buffer zones would also provide habitat for wildlife such as pheasants that need small, separate plots of habitat adjacent to cropland. However, buffer zones would not offer sufficient habitat for species that require large, unbroken blocks of their native landscape, such as grassland species like the prairie chicken. These species would require whole-field enrollments to provide sufficient habitat. Therefore, a mix of buffer zones and whole field enrollments may be appropriate for a future CRP to provide benefits for a wider range of wildlife species.

In this connection, three reports issued in February 1995 suggest that, if wildlife habitat enhancement is established as a major goal of a future CRP, the acreage required for whole-field enrollments could be substantial. For example, the Wildlife Management Institute recently estimated that 27 million acres of grassland are needed in the Great Plains and eastern Mountain states to achieve regional goals of stabilizing and restoring wildlife populations. These acres would provide habitat for game birds and nongame birds. The National Audubon Society report recommends that future CRP enrollments, principally in these regions, should be targeted to areas that have the highest value to wildlife, such as acres adjacent to existing wildlife resource areas. In estimating the number of CRP acres that have the highest value to wildlife, a report by the Center for Agricultural and Rural Development states that very large wildlife benefits would likely result from converting some grassland from cropping uses but that, beyond some point, enrolling additional grassland is likely to yield significantly lower benefits.

Wildlife biologists have also suggested that the CRP—using buffer zones or whole field land retirement—could be targeted to provide habitat for threatened or endangered species. According to USDA, the habitat for 319 wildlife species is threatened or endangered because of agricultural development. These habitats are concentrated in the Southwest, Florida, southern Appalachia, and the northern Great Plains.

Modifying the CRP Could Provide Environmental Benefits for a Longer Term and at Less Cost

Changes to the CRP—focusing on using buffer zones, allowing alternative economic uses, and purchasing long-term easements restricting certain activities on the land—could make the program less costly to the federal government while providing longer-term environmental benefits.

Buffer Zones Could Provide Environmental Benefits at Less Cost

USDA officials and other agriculture and environment experts have recommended the use of buffer zones as one method to protect the environment while reducing the costs of the CRP. That is, the program could be modified to focus primarily on removing buffer zones from production, rather than whole fields. This program would be smaller—and therefore less costly to the federal government—than the current program. For example, if the approximately 6 million acres identified as appropriate for filter strips to protect surface water and wetlands were enrolled in the CRP at the current average rental rate of $66 per acre for the regions where this acreage is located, total rental rates would be $396 million per year rather than $1.8 billion for the current 36.4 million CRP acres. At the same time, more land would be available for production.

Alternative Economic Uses Would Reduce the CRP’s Cost Per Acre

USDA could reduce the federal per-acre cost of the CRP by allowing CRP participants to generate revenues on CRP land in ways that do not impair the environment, such as harvesting hay at certain times of the year in exchange for reduced CRP payments. Currently, CRP participants are only allowed to cut hay or graze cattle on CRP land during emergency periods as declared by the Secretary of Agriculture. A House bill (H.R. 3894) introduced in February 1994 proposed allowing limited uses—haying, grazing, producing seeds, and harvesting grass or trees for biomass fuel—in exchange for a 20-percent or greater reduction in current rental rates. Limitations would be placed on these activities to ensure that environmental problems are minimized. While some of these activities could be conducted on buffer zones, others—such as grazing—would generally require larger plots of land. In addition, USDA officials noted in comments to a draft of this report that allowing alternative economic uses may meet opposition from producer groups because it would negatively impact the livestock and forage markets if a large number of CRP participants choose this option.

This proposal encourages CRP participants to convert their CRP land to uses other than cropping. The Congress is considering offering current contract holders this option to save money on current contracts and to encourage them to experiment with new uses of the land.

Easements Offer Long-Term Protection

Through the purchase of easements from farmers, who agree to restrictions on the use of their land, the government can ensure that land will stay out of production for longer than 10 years. Easements offer a better guarantee of long-term protection because they are an interest in the land itself and typically are for a substantial duration (such as from 10 years to in perpetuity). Because easements are recorded on the title to the land and are binding on subsequent owners, they can ensure that the restrictions on the land will be honored even if the land is sold. In addition, easements can cost less to the government than three 10-year contract renewals. For example, if the approximately 6 million acres identified as appropriate for filter strips were enrolled in easements at $620 per acre, total program costs would be $3.1 billion in 1994 dollars, compared to current program costs of $18.1 billion for rental payments.Alternatively, if that land were enrolled in 10-year contracts at the current average rental rate of $66 per acre for the regions where these acres are primarily located, total program costs for 30 years would be $5.9 billion in 1994 dollars.

Beginning with the tenth signup period in 1991, CRP participants had the option of either contracts or easements and overwhelmingly opted for contracts because they were reluctant to restrict the use of their land for a long term. Approximately 10,000 acres—less than 0.5 percent of the CRP enrollment in signups 10 through 12—were enrolled as easements. In contrast, USDA offered easements, but not contracts, to farmers through the Wetlands Reserve Program, and farmers more willingly accepted easements. For example, in the Wetlands Reserve Program pilot in 1992, farmers submitted bids for nearly 250,000 acres even though USDA could accept only 50,000 acres. Given the attractiveness of contracts over easements when both are offered, USDA officials believe that easements are viable only if contracts are not offered simultaneously.

Conclusions

Only a small amount of total cropland nationwide may need to be removed from crop production to protect the environment. Environmental degradation on this small amount of cropland can be managed by establishing buffer zones instead of removing entire fields from production. Under the buffer-zone approach, only 6 million acres of cropland would need to be removed from production and placed in buffer zones to protect surface water and wetlands. The buffer-zone approach can also be used to protect groundwater, air, and some wildlife habitat and is more efficient and less costly to the government because it allows more cropland to be in production. However, this approach would probably not provide for the habitat needs of all wildlife species. Therefore, if wildlife habitat enhancement is established as a major objective, a future CRP could require more acreage than that needed for buffer zones. Also, a buffer-zone oriented CRP would tend to put more land back in production and, depending on farm prices, could reduce farm income for CRP participants. Accordingly, this approach would not help achieve the current CRP’s supply control and farm income objectives.

In addition, modifying the CRP could reduce federal costs and increase the amount of time the land is protected by allowing CRP participants to engage in limited uses of the CRP land for a reduced federal payment and encouraging the use of long-term easements instead of 10-year contracts.

Matters for Congressional Consideration

As the Congress debates the reauthorization of the farm bill in 1995 and contemplates the future environmental objectives of the CRP, it could consider modifying the CRP to (1) focus more on creating buffer zones where appropriate instead of removing whole fields from crop production, (2) allow alternative economic uses on CRP land, and (3) use long-term easements instead of 10-year contracts for any new CRP enrollments.

Agency Comments and Our Response

In responding to a draft of this report, USDA said that the report focused on the CRP’s environmental objective and did not address the CRP’s supply control and farm income objectives. We agree that this report focuses on the potential adverse environmental impact of CRP land returning to production because this was the issue the requesters asked us to address. However, we were not silent on other issues. Because we recognized that the CRP was also intended to reduce surplus crop production and support farm income, we summarized the results of six economic studies that estimate the impact of returning CRP land to production on these two objectives. (See ch. 3 and app. III.) These studies generally concluded that federal outlays for commodity program payments will increase but will not exceed current CRP payments. In addition, some studies concluded that farm program adjustments, as well as market adjustments, would mitigate the impact of lower farm prices.

In addition, USDA said that the Secretary of Agriculture’s December 1994 announcement of planned CRP modifications will address many of the issues discussed in the report. USDA’s actions include modifying and extending existing contracts to target environmentally sensitive land, adjusting rental rates to more accurately reflect local prevailing rental rates, and encouraging the establishment of long-term easements on CRP land. USDA also stated that a future CRP should include a mix of buffer zones and whole-field enrollments to ensure flexibility. We agree that these modifications are steps in the right direction and will improve the environmental benefits and the cost-effectiveness achieved from new CRP enrollments. These steps will not, however, make the program as cost-effective as possible because USDA will still allow current CRP land that could return to crop production without harming the environment to remain in the program. As discussed in chapter 3, most CRP land can return to production with minimal impact on water, air, and soil quality if farmers use appropriate conservation practices.

USDA also made three additional comments related to our matters for congressional consideration. USDA asserted that (1) long-term easements are more costly to the federal government than 10-year contracts, (2) easements will be less attractive to farmers than 10-year contracts, and (3) allowing alternative economic uses on CRP land may meet strong opposition from certain producer groups.

Regarding the first issue, USDA focused on an example of easements in our report and asserted that the easement price was too low. In our draft report, we recognized that easement prices are likely to vary between geographic regions and soil types. In preparing our cost analysis, we compared expected CRP costs to an estimate of what easement prices might be. Our easement price estimate was based on the Wetlands Reserve Program—the only large-scale USDA land retirement program that purchases both partial and whole-field easements, rather than 10-year contracts. This price—$620 per acre—is actually higher than the average expected easement price of $583 quoted in USDA’s comments. Even using the higher price estimate, our example shows that if 6 million CRP acres were enrolled in 30-year easements rather than 3 10-year contracts, total program costs would be $3.1 billion—53 percent of the cost of contracts.

Regarding the second issue, we found that easements are generally less attractive to farmers when 10-year contracts are offered simultaneously. Not surprisingly, when farmers are given a choice between higher government payments through 10-year contracts rather than lower payments through easements, they choose to receive the higher payments. When only easements are offered, farmer acceptance is much better. For example, our draft report cited the Wetlands Reserve Program pilot in which farmers submitted bids for five times the amount of acreage that was authorized, even though easements were the only option available to farmers.

Concerning the final issue, we agree that some producer groups may oppose allowing alternative economic uses on CRP land because they believe that it would negatively impact the livestock and forage markets if a large number of CRP participants choose this option. However, because of the potential federal cost savings and the sensitivity of this issue, we believe that it deserves congressional consideration during the 1995 farm bill deliberations.

We made minor revisions to our final report to address USDA’s comments. None of the revisions changed the message of the report or our matters for congressional consideration. USDA’s comments and our evaluation of them are included as appendix IV.

Appropriate Conservation Practices for Cropland in Production Can Be Pursued Through Current Programs or New Proposals

Except for buffer zones, most CRP land and other environmentally sensitive cropland can generally be in agricultural production without seriously harming water, air, and soil quality if farmers use appropriate conservation practices such as correct chemical application, reduced tillage, and periodic rotations to cover crops. Our analysis focused on the most environmentally sensitive cropland. In the absence of appropriate conservation practices, production on such land could result in serious environmental degradation.

Appropriate conservation practices can often be achieved through USDA’s regulatory and voluntary programs, which cost less per acre to the federal government than the current CRP. With or without modifications, these programs should ensure that cropland in production will not return to pre-CRP conditions of environmental degradation. In addition, new proposals called green payments could be utilized to promote greater use of appropriate conservation practices.

Although this report is focused on CRP’s environmental objective, we recognize that if CRP land returns to production it may impact this program’s other two objectives—reducing surplus crop production and supporting farm income. Therefore, we examined six economic studies that estimate the impact on these objectives. (See app. III.) Most studies found that, in the short term, CRP acres returning to production may increase crop supplies thereby causing lower farm prices and income. However, the studies also found that these effects are likely to be mitigated by adjustments in federal programs and the market.

Millions of Environmentally Sensitive Acres Can Be Farmed Under Conservation Practices

Millions of CRP acres and other cropland acres nationwide that are environmentally sensitive can be in production with the use of appropriate conservation practices, such as reduced tillage, appropriate chemical application, and periodic rotations to cover crops. The following presents our estimate of the amount and location of these acres for each environmental sensitivity factor and describes USDA-recommended conservation practices to mitigate the impact of agricultural production on these environmentally sensitive acres. These estimates cannot be totaled because they are not mutually exclusive (the same land may be sensitive to several of the five factors).

Surface Water and Wetlands. Approximately 10 million CRP and other cropland acres—primarily in the Corn Belt and Appalachian states—are extremely erodible and between 100 and 500 feet from surface water or wetlands. (See fig. 3.1.) According to USDA, these acres have the highest potential to contaminate surface water and wetlands through erosion caused by rainwater and the resulting runoff of sediment and chemicals. Approximately 1 million of these acres are currently in the CRP. Conservation practices that can mitigate this erosion include reduced or no tillage, periodic rotation to cover crops, and conservation structures, such as terraces.

Groundwater. Approximately 149 million acres of farmland nationwide—concentrated in the Corn Belt, Lake, and Eastern states—are most likely to contaminate groundwater because of the leaching of agricultural pesticides. (See fig. 3.2.) According to a USDA index of groundwater vulnerability, these acres have the highest potential for contaminating groundwater because they have highly leachable soils and/or are subject to chemical application. Of this national total, approximately 8 million are in the CRP. Proper nutrient, pesticide, and herbicide applications and crop rotations can significantly abate the potential for groundwater contamination.

Air. Approximately 19 million CRP acres and other cropland acres nationwide—concentrated in the Great Plains and Mountain states—have the highest potential to decrease air quality through wind erosion. (See fig. 3.3.) Approximately 6.7 million of these acres are enrolled in the CRP.

Conservation practices such as crop rotations and reduced or no tillage can reduce the potential for wind erosion.

Soil. Approximately 50 million CRP acres and other cropland acres are least able to sustain soil productivity, according to USDA’s erodibility index. This index, a commonly used measure of soil productivity, compares the amount of potential wind- or water-caused erosion with the amount of erosion the soil will tolerate. (See fig. 3.4.) About 8 million CRP acres are included in this estimate. Conservation practices that help sustain soil productivity include crop rotations, reduced tillage, and appropriate chemical application.

A different soil indicator—the land capability class—measures a field’s suitability for crop production on a scale of 1 through 8, with 8 being the least suitable for crop production. The land capability class was one of the measures used to determine eligibility for CRP enrollment. Approximately 24 million CRP acres and other cropland acres nationwide, concentrated in the Great Plains and the Midwest, have the least suitable soil for crop production, according to this index. (See fig. 3.5.) Approximately 4 million of these acres are in the CRP. While proper soil management techniques, including multiyear cover crop rotations, can enable some of these acres to sustain crop production, other acres may be best suited for rangeland or pastureland rather than cropland.

While the erodibility index and the land capability class are traditional USDA measures of soil productivity, soil scientists generally agree that more complete measures of a soil’s overall quality are needed. In addition to productivity, soil quality measures would include texture, density, the ability to absorb chemicals, and the ability to retain water. USDA is currently developing soil quality measures that will examine the effects of long-term crop production on these characteristics.

Wildlife Habitat. Crop production improves the habitat for some wildlife species while adversely affecting others. Therefore, it is difficult to estimate the amount and location of environmentally sensitive cropland for this factor. Wildlife biologists agree that the effects of production on wildlife can be mitigated through the use of conservation practices such as periodic rotations of cover crops, proper cover crop management on yearly set-aside acres, and greater use of multiyear set-aside acres. However, of the five environmental factors, damage to wildlife habitat is the most difficult to mitigate while leaving the land in production.

USDA Programs Foster Conservation Practices and Could Be Strengthened

For those acres requiring conservation practices, USDA conservation programs that currently require or encourage the use of such practices can prevent a return to pre-CRP environmental conditions or could be strengthened to increase environmental benefits. For example, one program—conservation compliance—requires farmers who want to receive USDA program benefits to use appropriate erosion control practices. This program could cover nearly 65 percent of CRP land if farmers wish to return this land to production and receive program benefits. Alternatively, tightening the erosion control standards could further reduce erosion.

USDA Regulatory and Voluntary Conservation Programs Can Prevent a Return to Pre-CRP Environmental Conditions

USDA’s regulatory conservation programs—the conservation compliance program and the swampbuster program—can ensure that environmental degradation from crop production will not return to pre-CRP levels if farmers wish to continue receiving USDA program benefits. The conservation compliance program—enacted in 1985—requires farmers to implement plans to reduce soil erosion on highly erodible cropland. These plans will be required on approximately 22 million CRP acres—65 percent of all CRP acres—if those acres return to crop production. The plans have already been implemented on over 100 million highly erodible acres currently in crop production. The swampbuster program—also enacted in 1985—prevents the conversion of wetlands to new cropland. Approximately 667,000 CRP acres are wetlands and could be subject to swampbuster; another 16 million acres of wetlands on other cropland were also subject to swampbuster as of March 1994.

In addition, as shown in appendix I, 17 voluntary USDA environmental programs could reduce the impact of returning CRP land to production, at a lower cost per acre than the CRP. These programs generally provide technical assistance, cost-sharing, and/or incentive payments to farmers to establish conservation structures or conservation practices. For example, the Water Quality Incentives Program provides incentive payments to farmers for 3 years to encourage the adoption of water quality management practices. Another program—the Agricultural Conservation Program—provides financial assistance for approved conservation and environmental protection practices. Currently, USDA expenditures for these programs, including expenditures for the conservation compliance and swampbuster programs, are less than expenditures for the CRP. (See fig. 3.6.)

Strengthening Some Current USDA Programs Could Improve Environmental Benefits

Strengthening the environmental requirements for some current USDA programs could provide greater environmental protection. While examining the entire spectrum of USDA programs could lead to potential improvements, policymakers, USDA officials, and environmental groups have discussed the following modifications:

Conservation Compliance. Tightening the soil erosion tolerance standard in conservation compliance plans could further reduce erosion. For example, some environmental groups and Environmental Protection Agency and USDA officials have suggested that farmers should be required to reduce erosion to “T”—the maximum soil erosion that can occur while maintaining soil productivity. In addition, broadening conservation compliance plans to more explicitly include water quality impacts could lessen the off-site impact of erosion. For example, a field may not have a soil erosion level high enough to fall under current compliance standards, yet may be polluting a nearby river even with a relatively low erosion level. The field, therefore, could be subject to appropriate erosion control practices.

Acreage Reduction Program and 0/50/85 Program. Improving cover crop requirements for programs that idle a specified number of base acres annually—Acreage Reduction Program and 0/50/85—could improve environmental benefits on these acres. Currently, a cover crop is not always required on idled acres or, if required, falls short of potential environmental benefits. Requiring improved cover crop standards could reduce erosion and provide wildlife habitat and still leave the idled acreage in good condition for subsequent cropping.

Additionally, encouraging the use of multiyear planning would keep the same acreage idled for more than 1 year, thereby improving environmental benefits on that acreage, particularly for wildlife.

Base Acres. Allowing farmers with environmentally sensitive base acres—acres for which they are entitled to receive USDA payments based on the amount of crops they produce—to sell base-acre rights to another farmer with less sensitive land could reduce the incentive to farm environmentally sensitive land. For example, under a House bill (H.R. 3894) introduced in February 1994, CRP contract holders would be allowed to offer their CRP base-acre rights for lease or sale to producers for use on cropland in the same or adjacent county in which the land is located in exchange for maintaining the land in permanent cover. However, the USDA CRP task force believes that the administrative costs of such a program would be substantial.

Green Payments Can Encourage Farmers to Make Greater Use of Appropriate Conservation Practices

Recent proposals called green payments—incentives to farmers to adopt appropriate conservation practices—suggest that environmental benefits can be increased above the level of current conservation programs. These incentive payments would augment current price and income support programs that are primarily focused on production objectives. While some current conservation programs, such as the Agricultural Conservation Program, could continue to assist farmers in meeting conservation goals, green payments would be available for a broader set of conservation practices, such as fencing off streams from livestock.

For example, under one green payments approach, farmers could maximize federal support for agricultural production by participating in two programs. The first program would be similar to current price and income support programs that primarily pay farmers based on the amount of production. Farmers would be eligible for support payments at 80 to 90 percent of the current level as well as other USDA support programs in exchange for meeting minimum conservation compliance standards. Whether or not they participate in this program, farmers would also be eligible for a separate green payments program that pays farmers if they use additional conservation practices beyond the minimum conservation compliance standards.

While the green payments concept is still in its formative stages, agriculture and environment researchers we spoke with agree that a green payments program should (1) consider the impact of crop production on the whole farm as well as the watershed, (2) allow state and local representatives to identify problems and allocate resources, (3) complement a regulatory approach, and (4) not be linked to participation in other USDA programs.

Consider the impact on the whole farm and watershed. Whole-farm planning involves identifying pollution sources and developing plans to implement appropriate conservation practices uniquely tailored to fit each farm’s topographical conditions and business practices. Furthermore, even with whole-farm planning, addressing conservation problems on a farm-by-farm basis does not sufficiently address the environmental problems within an entire watershed. Through watershed planning, USDA can more efficiently set conservation priorities and target technical and financial assistance to the areas with the greatest need.

Allow state and local representatives to identify problems and allocate resources. Since environmental problems differ between regions, USDA officials and agriculture and environmental group representatives generally agree that local representatives may be in a better position to identify and set priorities on environmental issues and develop site-specific plans for addressing them.

Complement a regulatory approach. The voluntary incentives should complement mandated conservation practices. According to a 1993 report by the National Research Council, the voluntary approach is most effective when the conservation practice to be implemented is also profitable to farmers. Regulatory requirements can be used to achieve a threshold level of environmental protection. Voluntary incentive payments can then be used to assist farmers in achieving higher levels of environmental protection.

Not be linked to participation in other USDA programs. Agricultural and environmental researchers we spoke with said that participation in a green payments program should not be linked to participation in other USDA programs because the most environmentally sensitive land may not be covered by these other programs. Current agricultural support—deficiency payments, crop insurance, disaster payments, or loans—are not necessarily targeted to areas with the greatest environmental problems, according to agriculture and environmental researchers we spoke with. Therefore, conservation efforts that are only linked to current programs may not address critical environmental concerns.

CRP Acres Returning to Production May Impact Farm Prices and Income

We recognize that CRP acreage returning to production may result in surplus crop production and impact farm prices and income. Therefore, we examined several economic studies that estimate this impact. (See app. III.) While the degree of impact depends on such assumptions as agronomic conditions, market conditions, and public policy decisions, most studies found that CRP acres returning to production may lower farm prices and increase federal commodity program payments. However, total government outlays for commodity program payments probably will be less than the level of current CRP payments, resulting in net government savings. Furthermore, some studies concluded that farm program adjustments, as well as market adjustments, would mitigate the impact of lower farm prices.

Conclusions

Except for acres in buffer zones, most CRP acres and other environmentally sensitive cropland can stay in production without significantly impairing the environment if farmers use appropriate conservation practices. USDA’s regulatory and voluntary conservation programs, as currently structured or with strengthened environmental objectives, encourage the use of these practices. Therefore, even if the Congress allows the CRP to expire, available programs may prevent a return to the environmental problems that existed before 1985. A green payments approach offers the potential to further emphasize conservation objectives in agricultural production.

Agency Comments and Our Response

In responding to a draft of this report, USDA said that, until the green payments concept is more fully developed, it is impossible to determine whether green payments would be a viable alternative in accomplishing those objectives currently being met by CRP. We included a discussion of green payments because our requesters specifically asked us to provide this information. We agree that this concept needs to be more fully developed, and our report states that the green payments concept is still in its formative stages. This concept is being explored to promote greater use of appropriate conservation practices that could include land retirement but would also include practices for lands in crop production.