Overview
Incentive payments for natural resource conservation on working lands
(cropland and grazing land) are a growing part of farm and conservation
policy. The Environmental
Quality Incentives Program (EQIP) provides
technical, financial, and educational assistance for a wide range
of agri-environmental activities. EQIP is attractive to producers
due to the program's flexibility in addressing natural resource concerns
while maintaining land in productive agricultural use. Farmer applications
for enrollment in EQIP far exceeded available funding in the late
1990's. The increasing concern about environmental impacts of working
farmland, combined with high demand for EQIP funding have since led
to significant increases in authorized EQIP funds.
EQIP's principal objective, as revised in the 2002 Farm Act, is to
optimize
environmental benefits. Environmental targeting is accomplished
by assisting farmers to implement a conservation plan to address
the identified priority resource concerns. A conservation plan
may include a combination of structural, vegetative, and land management
practices.
EQIP consolidates and better targets the functions of the Agricultural
Conservation Program (ACP), the Water Quality Incentives Program
(WQIP), the Great Plains Conservation Program (GPCP), and the Colorado
River Basin Salinity Control Program. EQIP's status as USDA's primary
conservation program providing support on working farm land, along
with the choice of among some 250 eligible conservation practices,
offers a unique opportunity for better understanding of what conservation
practices are being implemented, how producers' conservation needs
vary regionally, and the costs of implementing these practices.
The data presented here provide:
- An overview of what conservation practices are being funded,
- Preliminary estimates of unit costs for the most commonly
contracted conservation practices; and,
- A comparison of unit costs for different contract sizes
that help to determine the extent to which economies of scale
exist for each practice.
All results are presented at the national level, by
ERS
Farm
Resource Regions, and for Farm
Production Regions. A State-level breakdown
of the allocation of EQIP funds is also provided.
Results are also differentiated
by time period.
Features
EQIP
funds vary by ERS Region—A map of the regional
distribution of EQIP funds, 1997-2004 (2/07).
Flexible Conservation
Measures on Working Land—From 1985 to 2002,
the majority of federal conservation dollars going
to farm operators has been to retire land from crop
production, mainly through the Conservation Reserve
Program. Yet most U.S. cropland remains in active
production, as do vast areas of pasture and rangeland.
These "working lands" account for more than 800 million
acres in the conterminous U.S. The Farm Security and
Rural Investment (FSRI) Act of 2002 sharply increased
conservation funding and earmarked most of the increase
for working-land payment programs (WLPPs). Funding, however, is
only one step toward enhancing conservation on working land. The
design and implementation of WLPPs will largely determine the
extent to which environmental goals are achieved and whether they
are cost effective (6/05).
Balancing
Conservation Costs and Benefits—The growing role of natural
resource conservation in U.S. farm policy is evident in the fivefold
increase in funding for the Environmental Quality Incentives Program
(EQIP) in the 2002 Farm Act. Recognizing the dearth of data concerning
the implementation of conservation practices on U.S. farms, ERS
has constructed a database using EQIP conservation practice data.
The database offers a unique opportunity to better understand the
demand for conservation practices across regions, the conservation
practices being funded and implemented, and the unit costs (dollars
per acre, dollars per foot, etc.) of implementing these practices
(9/03).
EQIP:
Conserving While Farming—Applications to participate in
the program have exceeded annual funding, but some participants
have opted to cancel out entirely or withdraw some of the practices
specified in their contracts. This could have implications for
program design and funding, Agricultural Outlook (9/01).
Media and Naming Convention
The 10 files in the EQIP summary database can be downloaded
in Excel spreadsheet format. Each file contains 2 worksheet tabs:
one for 2001-2003 (through 3rd quarter), the second for 1997-2000.
In all files the units are provided alongside the variable.
Where different practices are measured in different units, no
single unit can be defined at the top of the column. In that case,
the physical units (acres, feet, etc.) used to measure a conservation
practice are provided in the column NRCS_UNIT. Each worksheet
includes a description of the variable as a note that appears
when the mouse cursor is placed over the variable name at the
top of each column.
EQIP Funding
These files provide data for all EQIP funds allocated by conservation
practice, at the national, State, ERS Farm Resource Region, and
Farm Production Region levels.
Unit Costs
For some conservation practices (those most commonly implemented
under EQIP), cost data were computed on a per-unit basis. Obtaining
these data required tracking mistaken entries in the database. Given
the database's large size, the unit costs were computed for only
33 conservation practices out of approximately 250 eligible practices.
These files contain the mean unit cost (along with its standard
error) independently of EQIP payments to farmers for a practice
contracted under EQIP, the median of the unit cost, and the number
of contracted practices used in obtaining the mean.
Scale Effects on Unit Costs
This set of files illustrates, for a subset of the 33 conservation
practices for which unit costs were calculated, how the unit cost
for a conservation practice changes as the size of the contract
increases. The data include the median number of units approved
for a conservation practice, and the mean unit cost for the contracts
below and those above the median units approved. Making this distinction
highlights whether larger contracted practices have a lower unit
cost due to economies of scale.
For these files highlighting the economies of scale, only those
practices measured in acres or feet among the 33 selected practices
were included. The excluded practices were all major structural
practices (such as waste storage facilities, wells, ponds, etc.).
The excluded practices are reported in terms of the number of structures
involved, which does not capture the size of the practice. Furthermore,
most EQIP contracts include only one unit of these structural practices
leading to only a few data points to be used for estimating the
unit cost for projects above the usual one unit.
Some of the 33 practices are land management practices, for which
incentive payments are provided, such as:
- Brush management
- Conservation crop rotation
- Irrigation water management
- Nutrient management
- Pest management
- Residue management
- Waste utilization
Data Sources and Assumptions made in Computing the Unit
Costs
All data in the files are derived from Record04 of the FSA EQIP
database detailing approved contracts. The time period covered
in all cases is fiscal 1997-2003.
Apparently there were misunderstandings on the convention adopted for
reporting the number of units approved for a conservation practice in
EQIP contracts in this database. The computerized database input convention
requires that the number of units approved be multiplied by 10 (one implicit
decimal place). For example, 10.2 acres should be entered as 102 in the
database. However, in many cases, inordinately high unit costs are obtained
(obtained by dividing the total cost of completion for a conservation
practice by the number of units approved), arising from the fact that
the number of units approved was not entered with the implicit decimal
place. To correct for this upward bias in the unit costs, a range was
established for the unit cost of each practice. For sample points whose
unit cost was beyond this range, the assumption was made that the units
had been reported without multiplying by 10, and the amount approved was
adjusted accordingly by a factor of 10.
The acceptable
range for unit costs was derived from a sample
of State NRCS field technical guides found on the Internet that detail the average costs of
conservation practices. The States used to derive the range were Alabama,
Maine, Missouri, Montana, Ohio, North Dakota, Oklahoma, Virginia, and
Wyoming. The edit criteria adopted were:
- Establish a cutoff point at 1.5 times the midpoint of the range
- Drop all points falling between 1.5 and 2 times the midpoint
- Rescale by a factor of 10 all points above 2 times the midpoint
(but less than 15 times the maximum unit cost encountered in field
technical guides)
Visual Inspection of the Distribution and the Cutoff
Points Indicated that the Method was Effective
For the regionally disaggregated unit-cost files, some of the unit costs
are based on relatively few data points. The standard error of the mean
is a useful indicator of the reliability of the estimate.
The unit costs are calculated by inferring the total cost of the practice
based on the program payment made and what cost-share was requested. The
program allows for 75 percent cost-sharing, but the maximum rate established
by the either the State (for Statewide resource concerns) or locality
(for conservation priority areas) is often less than the maximum. Also,
in the competitive bid process allowed until 2002, some producers would
offer to take less than the maximum cost-share to improve their ranking.
The unit cost is the cost to the farmer before receiving EQIP payments.
The EQIP program allows incentive payments for a maximum of 3 years,
but requires the practice to be implemented for the term of the contract.
The unit cost presented here may be biased upwards for these practices.
Land management practices are often cost-effective and producers will
offer to add them to the contract at no cost to improve their ranking.
To avoid biasing the unit cost data, these offers were excluded from the
calculation.
Related Resources
The Working-Land
Conservation Programs chapter of Agricultural Resources and
Environmental Indicators, 2006 Edition (AREI) gives
an overview and comparison of EQIP and Conservation Security Program
(CSP).
The
National Handbook of Conservation Practices provides definitions
and information on the EQIP practices.
Environmental
Quality Incentives Program page on the National Resources Conservation
Service (NRCS) website has updated information
and data on EQIP. Scroll down to the section "Program Information
by Fiscal Year" for State-level maps and data.
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