The conservation compliance program and best management practices: an integrated approach for economic analysis

Soil erosion not only depletes soil resources, but also causes water pollution. Federal programs have evolved over time to curtail soil erosion. However, soil erosion still persists in farmland and is expected to intensify with the growing world food demand. These concerns have led to the formulation of the Conservation Compliance Program (CCP) which requires every land owner farming highly-erodible soil to develop and implement a suitable conservation plan in order to be eligible for commodity program payments. Although the CCP has received a great deal of attention, the linkages between environmental policies and soil erosion have not been adequately addressed. The objectives of this article are to analyze the efficiency of the CCP using the concept of marginal land value and rank the Best Management Practices (BMPs) to control soil erosion on 12 major soils in Iowa. This article also examines the effect of CCP on net farm returns and the sensitivity of the optimal solutions to changes in T-values. Net returns for each soil type were estimated using the cost of production budgets and prices for corn, soybeans, oats, and meadow. The Universal Soil Equation was used to estimate the soil erosion under each rotation and management technique. The cost and return budgets were used to formulate a series of representative farms using a linear programming model to analyze the impact of CCP on net returns. The efficiency analysis of the CCP indicated that marginal values of different soil types do vary which implies that society may benefit from equalizing the marginal values through a traceable coupon system. The results on the BMP suggest that producers will comply with the CCP because the net returns from compliance are higher than the net returns from non-compliance in all soil types.