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Measuring the Impact of Direct Government Payments on the Value of Midwest Cropland

This CAE working paper considers the impacts of the farm bill on the value of farmland. The market for farmland in the United States is influenced by a variety of different forces including location, factors influencing crop growth and public policy. With the change in federal commodity payment programs brought about by the Federal Agricultural Improvement and Reform Act of 1996, there will be a concurrent influence on land values. The authors measure the current impact of direct government payments on Midwest cropland value to provide insight into the potential impact of the FAIR Act.

Agriculture and Water Quality

The United States Environmental Protection Agency now considers pollution from all diffuse sources to be the most important source of contamination in the nation's waters (USEPA, 1997). These pollutants cause dramatic changes in hydrology and water quality that result in a variety of problems. Hydrologic impact due to urbanization is reported to cause water quality problems such as sedimentation, increases temperatures, habitat changes, and loss of fish population.

Urbanization and Water Quality

We may have become an urban nation, but we remain an agricultural land. Nearly 70 percent of the United States, exclusive of Alaska, is held in private ownership by millions of individuals. Fifty percent of the United States, 907 million acres, is cropland, pastureland and rangeland owned and managed by farmers and ranchers. The responsibility for stewardship of the land lies in the hands of about 4.7 million individuals. This means that the care of 50 percent of the United States is in the hands of less than 2 percent of its citizens (USDA, Dec. 1996, p. 7).

Visions of Agricultural Conservation Policy Beyond 2002: Implications for Partnerships

This paper identifies the requirements for "smart" conservation partnerships -- alliances that are necessary and foster cost-effective, durable solutions to key problems. The basic structure and operation of partnerships are discussed, with special attention to the central role of transaction costs in forming and maintaining such alliances. The second section reviews the agricultural conservation policy setting and constructs a concept of policy beyond 2002 based on emerging trends and necessary actions to fill policy gaps.

Targeting and the Environmental Quality Incentive Program

In this paper, we analyzed how well the initial allocations made under the Environmental Quality Incentive Program (EQIP) addressed the environmental problems identified by the government and key stakeholders. The government defined 27 environmental and other variables which it weighted according to livestock and non-livestock issues. It took these variables into consideration when distributing the EQIP cost-share funds to the states.

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