The USDA Economic Research Service (ERS) has released a new study on “The Future of Environmental Compliance Incentives in U.S. Agriculture.” Conservation compliance provisions require conservation practices or limit land uses in order for landowners and operators to receive certain USDA program payments. These provisions have been credited with drastically reducing soil erosion on highly erodible land, as well as preventing the loss of wetlands and grasslands.
The ERS report examines the impact, or the lack thereof, if direct subsidies, which are tied to the conservation compliance provisions, are replaced with a stronger crop insurance program that does not require conservation compliance for participation. This is what the summary reveals:
“In recent years, direct payments—a type of farm commodity program payment—have made up a large share of Federal agriculture assistance that could be withheld from farmers who fail to comply with highly erodible land conservation (conservation compliance and sodbuster) or wetland conservation (swampbuster) provisions, known collectively as environmental compliance requirements. If direct payments are sharply reduced or eliminated to help reduce the Federal budget deficit, compliance incentives would be reduced on many farms, potentially increasing environmental quality problems. Some farmers will still be subject to compliance through existing Federal agricultural programs (e.g., conservation or disaster programs) or programs that may succeed direct payments. Making federally subsidized crop insurance subject to compliance could also make up some of the lost incentive to farmers.”
The ERS Briefing Room also provides an explanation of how the provisions work and the conservation benefits that have been attributed to them.