(NON)COMPLIANCE WITH AGRICULTURAL CONSERVATION PROGRAMS: THEORY AND EVIDENCE

This paper introduces enforcement costs and farmer noncompliance into the economic analysis of the USDA conservation program on highly erodible lands. A model of heterogeneous producers is developed to determine the economic causes of farmer noncompliance with the provisions of the conservation program. In addition, the paper determines the enforcement policy design that can induce conservation compliance and examines the effectiveness of the current enforcement policy in deterring producer noncompliance. The implications of the theoretical model are tested empirically with data provided by USDA. The analysis shows that farmer compliance with the provisions of the conservation program is not necessarily the natural outcome of self-interest and complete deterrence of noncompliance is not feasible with the current enforcement policy of the government. Both theoretical and empirical results indicate that the use of farm program payments as a leverage against noncompliance is not sufficient for inducing full producer compliance. Unless the government alters its policy on fines for fraudulent behavior, enforcement of conservation compliance will remain imperfect and some degree of noncompliance with the provisions of the program on highly erodible lands will continue to persist