Slippage in Conservation Cost Sharing

We examine whether subsidies for conservation on working farmland induce farmers to expand cultivation on more vulnerable land, potentially offsetting reductions in environmental spillovers, using a switching regression model with endogenous switching and censored endogenous variables applied to Mar...

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Bibliographic Details
Published inAmerican journal of agricultural economics Vol. 93; no. 1; pp. 113 - 129
Main Authors Lichtenberg, Erik, Smith-Ramírez, Ricardo
Format Journal Article
LanguageEnglish
Published Malden Oxford University Press 01.01.2011
Blackwell Publishing Ltd
Subjects
Agricultural economics
Agricultural land
Agricultural subsidies
best management practices
censored endogenous variables
Conservation
Conservation practices
Contour farming
Cost allocation
Cost efficiency
Cost sharing
Cover crops
Crops
Economic models
EM algorithm
Environmental conservation
Environmental protection
EQIP
Farming
Farms
Land conservation
Land use
nonpoint source pollution
Regression analysis
Spillovers
Studies
switching regression
Water resources
United States > US
USA, Maryland
conservation
nonpoint source pollution
EQIP
Q15
C34
cost sharing
censored endogenous variables
EM algorithm
best management practices
switching regression
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Summary:We examine whether subsidies for conservation on working farmland induce farmers to expand cultivation on more vulnerable land, potentially offsetting reductions in environmental spillovers, using a switching regression model with endogenous switching and censored endogenous variables applied to Maryland farm-level data. We find no indication that cost share awards are targeted toward water quality improvements. Receipt of cost sharing increases conservation practice adoption but not the shares of land allocated to conservation, implying little adverse selection in awards. Cost sharing decreases the share of land allocated to vegetative cover, so that environmental quality improvements from conservation are likely offset to some degree.
Bibliography:We thank Rick Horan, Madhu Khanna, Mike Roberts, JunJie Wu, seminar participants at the Heartland Environmental and Resource Economics Workshop and Oregon State University and two anonymous reviewers for comments and suggestions. Responsibility for any errors is, of course, ours alone.
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ISSN:0002-9092
1467-8276
DOI:10.1093/ajae/aaq124