Conservation Policy: Background

Conservation Policy Briefing Room Background Working-Land Conservation Programs Land Retirement Programs Farmland and Grazing Land Protection Programs Compliance Provisions for Soil and Wetland Conservation

Some farming practices (excess fertilization and manure, for example) can degrade our Nation's natural resources while others (such as land reservation for wildlife) can enhance our natural heritage. Policymakers have been devoting more attention and funding to agri-environmental policies and programs that support environmental enhancement and reduce the potential for environmental harm. Until 2002, the bulk of conservation funds went toward land retirement: paying farmers to remove environmentally sensitive land from crop production for a specified time. With the 2002 Farm Security and Rural Investment Act, policymakers substantially increased conservation funding, especially on lands used for crop production and grazing.

The Food, Conservation, and Energy Act of 2008 (2008 Farm Act) continued this trend by expanding programs that funded working land conservation and environmental practices. The 2008 Farm Act also expands support for wetland restoration and farmland preservation. Overall acreage in land retirement programs will fall as the Conservation Reserve Program (CRP) acreage cap decreases from 39.2 million to 32 million acres beginning October 1, 2009. Enrollment as of September 2008 was 34.7 million acres.

The conservation programs in the 2008 Farm Act also offer assistance to farmers making the transition to organic production and promote access to conservation programs for limited resource, beginning, and socially disadvantaged producers.

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USDA Conservation Programs in Relation to All Environmental Expenditures

Agricultural conservation programs are part of a larger Federal effort to protect and preserve natural resources. Conservation and land management efforts include agriculture, but also encompass programs of the Forest Service, Bureau of Land Management, Fish and Wildlife Service, and other Federal agencies. Funding for water resource programs, recreational services, and pollution control/abatement activities also come under the general rubric of natural resources. Agricultural conservation spending was about 16 percent of the $33.8 billion in Federal spending for natural resources in fiscal year 2007.

USDA Conservation Programs: A Portfolio Approach

USDA conservation programs have traditionally used voluntary approaches to agricultural resource problems. These approaches can avoid the inherent difficulties in regulating nonpoint sources of pollution and can minimize economic harm to farmers by educating them and providing them with incentives to willingly improve production practices. In passing the 2008 Farm Act, Congress reaffirmed a preference for addressing natural resource problems caused by agriculture through a consolidated set of financial assistance programs supported by research and education. In a notable exception, Conservation Compliance, which has successfully reduced soil erosion and protected wetlands, was continued.

USDA programs offer producers a range of options for assistance with conservation efforts, among them:

• Working-land programs provide technical and financial assistance to farmers who install or maintain conservation practices on land in production.

• Land retirement programs generally remove land from agricultural production for a long period (at least 10 years) or, in some cases, permanently.

• Agricultural land preservation programs purchase rights to certain land uses, such as development, in order to maintain land in agricultural use.

• Conservation Technical Assistance (CTA) provides ongoing technical assistance to agricultural producers who seek to improve the environmental performance of their farms.

This "portfolio" approach to conservation policy provides the flexibility needed to address agri-environmental issues. Most producers—regardless of their agri-environmental problems, resource settings, and the size and management structure of their operation—have options for receiving Federal assistance for conservation.

With the exception of Conservation Technical Assistance (funded through annual appropriations), all major USDA conservation programs are funded through the Commodity Credit Corporation (CCC). CCC funding is often referred to as "mandatory;" CCC-funded programs do not require annual appropriations. Nonetheless, funding for these programs can be changed by Congress at any time. Over the course of the 2002 Farm Act (2002-07), actual spending in major conservation programs was about 90 percent of the CCC authorized funding.

Conservation on Working Lands

Continuing a trend begun in the 2002 Farm Act, working land programs will grow. Spending in the four largest working land programs in the 2008 Act is projected to be $11.7 billion for FYs 2008-2012, up from $6.3 billion.

If Congressional Budget Office projections for conservation spending are realized for fiscal years 2008-12, combined funding for the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CStP) will exceed spending in the Conservation Reserve Program (CRP)—reflecting a major change in U.S. agricultural policy once dominated by the CRP.

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If proposed funding is fully realized, spending in the Environmental Quality Incentives Program (EQIP), the major working-lands program, will increase nearly 50 percent with the 2008 Farm Act, to about $7.2 billion for 2008-12. Average annual authorized funding increased even more, as the 2008 Farm Act covers one less year than the 2002 Farm Act.

Through EQIP, crop and livestock producers can get information and technical and financial assistance in designing and implementing conservation practices (structural or land management) on their land. Sixty percent of the program's funding continues to be targeted for livestock producers. The 2008 Farm Act targets 5 percent of funds for beginning farmers and another 5 percent for socially disadvantaged producers.

The 2008 Farm Act replaced the Conservation Security Program (CSP) with the Conservation Stewardship Program (CStP). Existing contracts, entered into under the old CSP will continue in force. Beginning in 2009, USDA will begin entering into contracts under the new CStP. To the extent that it can be done, the 2008 Farm Act directs USDA to enroll 12.77 million acres per year in CStP at an average cost of $18 per acre per year. Program acreage is to be allocated to States based primarily on each State's proportion of total national eligible acres, but also taking into account conservation needs, the degree to which CStP can help address these needs , and equity in the distribution of funds. Five percent of acres are to be made available to beginning farmers, and another 5 percent to socially disadvantaged producers.

The Wildlife Habitat Incentives Program (WHIP) provides technical assistance and cost-sharing to landowners and producers to develop and improve wildlife habitat. WHIP funding was just over $213 million during 2002-2007 but is slated to be $425 million over FY 2008-2012. The funding cap on long-term agreements (15 years or more), providing higher levels of cost-share assistance for priority habitat land, was increased to 25 percent.

Land Retirement

Land retirement programs pay producers to remove land from crop production. In exchange for retiring land, producers receive rental or easement payments, plus cost sharing and technical assistance to aid in the establishment and maintenance of permanent cover. Economic use of the land is limited.

Land retirement dominated Federal agricultural conservation spending between 1985 and 2002, and continues to be the largest single component of agricultural conservation spending. In FY 2000, 90 percent of cash conservation payments made directly to producers was associated with land retirement. Between 1985 and 2000, roughly 50 percent of all USDA conservation spending was for land retirement. (USDA conservation spending also includes cost sharing and technical assistance for non-land retirement activities, public works, and a range of other administrative, data collection, and research activities.)

The 2008 Farm Act decreased the Conservation Reserve Program (CRP) acreage cap from 39.2 million acres to 32 million acres, beginning October 1, 2009.

The Wetland Reserve Program (WRP) acreage cap was raised from 2.275 million acres to 3.041 million, through 2012. At the end of FY 2007 total CRP enrollment stood at 34.7 million acres, while WRP enrollment totaled nearly 2 million acres.

Agricultural Land Preservation

The Farmland Protection Program (FPP, formerly the Farm and Ranchland Protection Program) provides funds to State, Tribal, or local governments and private organizations to help purchase development rights and keep productive farmland in agricultural use. The 2008 Farm Act authorized funding of $743 million over FY 2008-12, an increase of nearly 50 percent of what was actually spent over 2002-07. The focus of the program was changed from protecting topsoil to protecting agricultural use and conversion values of land. Eligibility was expanded to forest land and other land that contributes to economic viability of the agricultural operation, or that serves as a buffer from development.

The Grassland Reserve Program (GRP) is designed to improve and conserve grazing lands through long-term rental agreements (10, 15, and 20 years) and permanent easements (or longterm easements subject to maximum term permitted by States). Cost-sharing is provided for up to 50 percent of approved restoration and maintenance costs. During FY 2003-2006, $217 million in financial assistance was made available to producers through GRP. The 2008 Farm Act expanded the enrollment limit by 1.22 million acres, to 3.22 million acres.

Other Conservation Programs

The Emergency Conservation Program (ECP) helps farmers to rehabilitate farmland damaged by natural disasters. In particular, it addresses problems that, if left untreated, would: (1) impair or endanger the land, (2) reduce the productive capacity of the land, (3) be so costly to rehabilitate that Federal assistance would be required to return the land to productive agricultural use, or (4) represent damage that is unlikely to recur in the same area. The program is funded on an as-needed basis, depending on the number and severity of natural disasters that damage farmland. Through ECP, USDA spent $330 million for FY 2003-2007.

Watershed Protection and RC&D

A final group of USDA programs provides conservation protection for watersheds and includes Resource Conservation & Development (RC&D). The watershed protection programs generally assist local communities with flood protection, water supply, and water quality. RC&D encourages and improves the capability of volunteer local elected and civic leaders in designated RC&D areas to plan and carry out projects for resource conservation and community development.

Compliance Mechanisms

To improve consistency between commodity and conservation programs, compliance provisions require farmers to meet some minimum standard of environmental protection on environmentally sensitive land as a condition of eligibility for many Federal farm program benefits—including farm commodity program payments. Compliance mechanisms can also leverage farm program payments for environmental gain—without additional payments—to the extent that producers adopt conservation practices to retain farm program eligibility. Evidence suggests that compliance mechanisms have played a role in leveraging reduction in overall soil erosion and wetland conversion for agriculture.