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. EQIP provides
technical, financial, and educational assistance to farmers and
ranchers implementing a wide range of agri-environmental practices
on land used for farming. Recognizing the dearth of data concerning
the installation of conservation practices on U.S. farms, ERS 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.
The types of conservation practices that farmers use fall into
two broad categories, each of which covers a wide range of
practices. Structural practices, as their name suggests, are conservation activities
that involve the installation of some sort of equipment or structure, such
as a pond to provide water for livestock. Management practices are conservation
methods or techniques that help farmers with the operational aspects of their
work. Some examples are tillage techniques, integrated pest management, and
conservation crop rotation.
The data reveal the range of costs farmers incur in implementing
conservation practices. On average, structural practices tend to
have higher fixed costs than management practices because they
typically require the use of heavy machinery. For many practices,
producers realize economies of scale (lower unit costs) on larger
conservation projects or installations. Not surprisingly, structural
practices, because they have higher fixed costs, tend to show greater
economies of scale. A comparison of small- and large-size installations
shows that the average unit cost reduction for structural practices
(from small to large installations) ranged from 14 percent to 70
percent, while for management practices, the range was 19 percent
to 35 percent.
Now, with the creation of this database, researchers and policy
analysts can examine the costs of conservation programs and policies
in a comprehensive manner and identify opportunities to reduce
costs. Policymakers can use such analyses to evaluate program performance.
Combined with information on the farm structure of the rural economy,
these data could also be used to target conservation programs more
effectively. Given the growing but still limited budget for conservation,
the database can help conservation program managers attain environmental
goals while attending to farmers’ specific conservation needs
and minimizing costs.
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