The Conservation Reserve: A First-Year Progress Report

One year ago, the conservation reserve of the 1985 Food Security Act looked like a program with the potential to reduce the environmental damages of U.S. agricultural production and to conserve soil. Resulting from the efforts of a unique coalition of environmentalists and farm interest groups, the legislation authorizing the conservation reserve (CR) placed environmental goals side by side with traditional farm-policy goals of income support and supply control. The legislation also sought to focus spending for soil conservation on highly erosive land, something the Soil Conservation Service has repeatedly been criticized for not doing.

How does the reserve look now, given the enrollment of 8.9 million acres, or 22 percent of the final reserve? It looks like a program with potential, much of it unrealized. It is worth examining both some of the reasons behind the reserve's failure to meet its potential and recommendations that might be made for its improvement.

The conservation reserve is a major part of the conservation title of the 1985 Food Security Act of 1985. The title's stated objectives are to reduce soil erosion, preserve land productivity, reduce sediment-related water pollution, limit the supply of surplus commodities, provide wildlife habitat, and transfer income to farmers. These are to be achieved by converting 40 to 45 million acres of land, for ten years, from crop production to perennial grass, legumes, windbreaks, or trees.

The conservation reserve is a voluntary program; eligible farmers participate by submitting a bid that specifies an annual rental fee and a management plan for vegetative cover. The government accepts all bids that fall below a maximum (which is established for production regions, called pools, within each state) and that propose an acceptable management plan. The government becomes responsible for paying the annual rental fee and 50 percent of the costs of establishing accepted management plans. Land eligible for placement in the conservation reserve currently includes soil classes deemed unsuitable for farming and more productive classes that are eroding faster than three times the so-called tolerance rate (or approximately 15 tons per acre per year).

The performance of the conservation reserve, as with any program, is determined by its ability to meet its objectives in relation to cost. Common sense tells us that the more objectives a program attempts to achieve, the more difficulty it will have achieving them—a view supported by the theory of economic policy. The success of a program in meeting its objectives, we have found, will be greater if we increase the number of policy instruments at the control of the government or increase the size of the pool subject to the policy (in this case, acres eligible for the CR) by liberalizing eligibility requirements. Theory also tells us that the number of policy instruments—the tools under the control of the government that may be used to affect program performance—should be at least as large as the number of objectives.

Viewed in isolation from other farm programs (such as commodity price supports), the conservation reserve at best has only one unrestricted policy instrument—the shift of cropland into the reserve for ten years. Moreover, the goals of the CR would be achieved only if the government were able to choose each of the 40 million acres of the reserve from the pool of qualifying land. Yet since the program is voluntary, the government does not have full control over the land included in the reserve and must influence the composition of the CR by eligibility requirements, selection criteria, and economic incentives. Selection criteria are especially important in reflecting the significance the government attaches to each objective.

In general, we would not expect to have much success in meeting multiple objectives with a single policy instrument. In practice, the degree of success depends how closely related the various objectives are. If the most highly erosive land contributes most to water pollution, provides the best wildlife habitat, and is highly productive, a single instrument may be reasonably effective. Yet the conservation reserve cannot be viewed as an isolated policy tool. The government has at its command many other policy instruments that relate to the objectives of the reserve; these include, especially, cross compliance—a program that denies farm-program benefits to cultivators of highly erosive lands and wetlands—and price support and acreage reduction programs. However, support programs are currently so lucrative for farmers that they are competing with the conservation reserve for participants, thus lessening its impact.

Policy theory provides several options for improving program success. We may reduce the number of objectives, increase the number of policy instruments, or increase the pool of eligible farmland. So far, the secretary of agriculture has only used one of these, though it is a powerful one: he has decreased the number of objectives—an action that may be contrary to the spirit of the legislation.

The secretary has also tried to expand the pool of land eligible for the reserve by reducing the erosion requirement to twice the tolerance rate, thereby expanding the pool to 103 million acres. His decision brought an outcry from environmentalists, mainly because of the much wider dispersion of land throughout the country classified under the lower tolerance criterion. Critics of the secretary's action feared that the reserve would become just another farm subsidy program with little environmental consequence. As a result of their protests, the secretary raised the criterion for major classes of productive farmland to three times the tolerance rate, thereby reducing the total acres eligible for the reserve to 69 million. While this was regarded as a victory by environmentalists since it lessens the chance of spreading the money too thinly, the stricter criterion in fact did not change matters much: eligible land is still widely spread throughout the country.

From the standpoint of policy theory, the movement to the stricter criterion was a step in the wrong direction, since it reduces the pool of eligible land for the reserve and consequently makes it more difficult to achieve the reserve's objectives. From the standpoint of political reality, however, it was a shrewd move. As the environmentalists evidently foresaw, the reserve as it is currently being implemented is no longer a multiple-objective program. The secretary of agriculture has reduced the original goals to one by limiting eligibility to highly erosive land. By accepting only bids that fall below the maximum bid level established for each region, he has also minimized the program's cost. The environmentalists, then, by insisting on the strict eligibility requirement, insured that the reserve would at least be targeted to highly erosive land, which is an improvement on past conservation programs.

Limitations of a single objective

The secretary was given much discretion by Congress in implementing the conservation reserve. But why did he reduce the legislation's multiple objectives to a single objective? The answers include bureaucratic behavior, bureaucratic inertia, and scientific uncertainty.

The conservation reserve will undoubtedly be subject to criticism and to exacting General Accounting Office (GAO) oversight, given current concern over the federal budget and the high level of spending on the CR and other farm programs. Therefore, criteria of demonstrable success and cost effectiveness have become important to the political success of its administrators, including the secretary of agriculture, who is charged with its implementation. In order to demonstrate the success of a program, it is necessary to measure its progress in meeting each objective.

Unfortunately, many of the objectives of the conservation reserve, including reduction in nonpoint pollution and the preservation of wildlife habitat, are almost impossible to measure. Work by researchers at Resources for the Future and others indicate, however, that these difficult-to-measure objectives often are the ones that policy should seek to address.

Closely associated with the work of John Krutilla of RFF is the theorem of resource economics that a private market will lead to the conservation of marketable goods and the exploitation of non market goods. Nonmarket goods, as might be expected, are those not exchanged on a market—examples being open space, scenic beauty, and most wildlife habitats. One of the important roles played by resource economists is to recommend policies that seek to improve the efficient utilization of nonmarket goods—of which at least three are closely linked to the conservation reserve: the preservation of wildlife habitat, the reduction in water pollution from soil erosion, and the preservation of land productivity for future generations.

A corollary may be formulated regarding political behavior, especially in the current atmosphere of budgetary concern: given a limited budget and a trade-off between measurable and unmeasurable objectives, bureaucrats will maximize the performance of measurable objectives at the expense of unmeasurable ones. Such behavior is "rational" because it is easier to demonstrate the performance of a measurable objective and therefore easier to justify public expenditures. It follows, then, that if many—or even most—nonmarket goods fall into the unmeasurable (or difficult-to-measure) category, not only will markets tend to exploit nonmarket goods, but the very policies designed to protect these goods will, if other measurable objectives compete for limited funds, also lead to their exploitation.

Bureaucratic inertia as a partial explanation for reduction of the reserve can be traced to the Department of Agriculture, which has a long history of providing income and technical assistance to farmers, and in many ways has developed a clientele relationship with them. For this reason the department feels more comfortable in addressing objectives that assist farmers, such as income support, supply reduction, and the preservation of land productivity. Most of the benefits of reduced water pollution and augmented wildlife habitat fall outside the farm sector and accrue to the general public.

Scientific uncertainty has also played a large role in the implementation of reserve policy. One rationale for concentrating policy on soil erosion is that if we reduce erosion by converting land in annual crops to less erosive uses, we will also reduce water pollution caused by erosion and provide more wildlife habitat. While sensible, such an approach is not as efficient as a program that incorporates the value of land as wildlife habitat and the contribution of land to water pollution directly into the selection criteria for the reserve. Unfortunately, we do not currently have enough scientific and economic knowledge to develop workable criteria that could be used to help select land for the reserve on the basis of the value of its contribution to water pollution or its value as wildlife habitat. This is an area that deserves much additional study.

Meeting goals

Given its focuses on controlling soil erosion and reducing program cost, how well will the CR program do in achieving its remaining environmental goals? Control of soil erosion is clearly linked with preserving the productivity of land. Research by Pierre Crosson at RFF has indicated that while there may be some justification for policies designed to preserve arable soil, there is a much greater need for policies designed to limit the off-site effects, such as water pollution, of soil erosion. Reducing erosion will also reduce water-borne sediment pollution, but it would be more efficient to begin with CR selection criteria that reflect a parcel's potential contribution to water pollution, such as proximity to waterways, topography, and climate.

We can get an idea of the potential success of the conservation reserve in meeting its goals by comparing the ranking of states according to first-year participation in the reserve with rankings based on different objectives. Ranked as the top five states in terms of acreage subject to high rates of water-based erosion are Tennessee, Missouri, Kentucky, Iowa, and Mississippi (see the 1982 National Resource Inventory). But the top five on the list of land eligible for the conservation reserve are Texas, Iowa, Montana, Missouri, and Colorado, which together have a total of 30.8 million acres, or 44 percent, of the eligible 69 million acres. The lists differ for a very important reason: eligibility for the reserve is based on both water and wind erosion, and Colorado, Montana, and Texas have very high rates of wind erosion—a form that contributes little to water pollution, though it does contribute to air pollution.

More important, while the technique used to predict soil erosion caused by water (known as the universal soil loss equation) rests on a solid scientific basis, prediction of wind erosion rests on a much shakier scientific foundation. This gives even greater cause for concern when one looks at actual CR participation rates from the first-year enrollment. The top five states ranked for enrolled acreage are Texas, Colorado, Minnesota, Kansas, and Oklahoma, which make up 45 percent of the total reserve. Minnesota is the only state in the group in which water-based erosion is the primary cause of cropland erosion. That is to say, while wind erosion is certainly a problem, its contribution to eligibility requirements for the conservation reserve is way out of proportion to its magnitude, especially in relation to controlling water pollution.

Recommendations

Several minor changes in the conservation reserve would make dramatic improvements in its ability to achieve environmental goals. The first would be the broadening of its eligibility requirements to include land that poses risks to groundwater or that causes salinity or toxic materials contamination, such as the Westlands region of California. The secretary of agriculture has the authority to include such lands under existing regulations, but has chosen not to exercise it.

The amount of land that may be admitted to the reserve purely on grounds of wind erosion should be restricted. The overrepresentation of land subject to wind erosion reduces the effectiveness of the reserve in meeting water-quality goals.

Policy instruments should be added. The reserve would have a much greater chance of meeting water-quality goals if its funds could be used to establish filter strips on the edges of fields in cultivation, or if noncrop land controls such as check dams and settling ponds could be used.

States should be assisted in establishing matching-fund programs to help target the reserve to specific environmental problems within state borders—a path followed successfully by Minnesota. Fortunately, there are indications that other states are following suit. The secretary of agriculture has the option to utilize different selection criteria in different states experiencing different problems; he should exercise this option.

Finally, everyone should accept the fact that the conservation reserve is a true multiple-objective program, and that use of the single criterion of erosivity severely constrains its ability to achieve multiple objectives. While the reserve is a compromise in the face of political reality and scientific uncertainty, its original objectives should not be forgotten. Until we can develop and implement selection criteria that truly reflect environmental values, the potential of the conservation reserve will remain just that.