Recreational Impacts of the Conservation Reserve Program: A Break-Even Approach

The Conservation Reserve Program (CRP) achieves supply control, income and improved environmental quality by paying farmers to substitute vegetative cover for crops on highly erodible land. The CRP has important economic impacts from the perspective of farmers and from the perspective of the regional economy. This study evaluates the CRP from each perspective. Previous studies of the CRP estimated the negative effects of reductions in crop production and the partially offsetting positive effects of payments to farmers and expenditures on vegetative cover. This study analyzes the additional positive economic impacts of increases in recreational activity stemming from improved environmental quality. A break-even approach was used to analyze the impacts of recreational activities which are anticipated, but whose precise magnitude is unknown . It was found that break-even levels for regional employment and income could be achieved if farmers received breakeven payments of $65/acre and if CRP-induced increases in recreational spending were $5-10/acre. Previous studies treat compensation paid to farmers in different manners, resulting in large variations in estimates of the program's impacts. This study presents a consistent method of dealing with the economic impacts of environmental and social programs, such as the CR~, whose objectives include decreased output with compensation for producers. This study is based on the CRP in Virginia, but the analysis of economic impacts of the CRP is also applicable to other regions, with appropriate adjustments for local conditions