RT Journal Article
SR Electronic
T1 Assessing Cost-effectiveness of the Conservation Reserve Program (CRP) and Interactions between the CRP and Crop Insurance
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 593
OP 617
DO 10.3368/le.92.4.593
VO 92
IS 4
A1 Miao, Ruiqing
A1 Feng, Hongli
A1 Hennessy, David A.
A1 Du, Xiaodong
YR 2016
UL http://le.uwpress.org/content/92/4/593.abstract
AB We examine the U.S. Conservation Reserve Program (CRP) enrollment design while accounting for the CRP’s interactions with the federal crop insurance program. We find that the current CRP is not cost-effective despite its intent to balance benefits and costs. Based on CRP contract-level data, we show that adopting a cost-effective enrollment design and incorporating crop insurance subsidies into the CRP’s Environmental Benefits Index would significantly increase the CRP acreage, environmental benefits, and savings on crop insurance subsidies, while leaving government outlay unchanged. Large geographical redistributions of CRP acreage would also occur. We further investigate the cost-effective design’s robustness to CRP benefit misspecifications. (JEL Q18, Q24)