The Influence of Rising Commodity Prices on the Conservation Reserve Program

44 Pages Posted: 22 Feb 2016

See all articles by Daniel Hellerstein

Daniel Hellerstein

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS), Resource and Rural Economics Division

Scott Malcolm

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: February 19, 2010

Abstract

This report considers how increased commodity prices might influence enrollment in and benefits from the Conservation Reserve Program (CRP) using two complementary models: a likely-to-bid model that uses National Resources Inventory data to simulate offers to the general signup portion of the CRP and an opt-out model that simulates retention of current CRP contracts. Under several higher crop price scenarios, including one that incorporates 15 billion gallons of crop-based biofuels production, maintaining the CRP as currently configured will lead to significant expenditure increases. If constraints are placed on increasing rental rates, it might be possible to meet enrollment goals with moderate increases in CRP rental rates — but this will mean accepting lower average Environmental Benefits Index scores as landowners with profitable but environmentally sensitive lands choose not to enroll.

Keywords: CRP, ethanol, commodity prices, likely to bid, REAP

JEL Classification: Q24, Q28, Q18

Suggested Citation

Hellerstein, Daniel and Malcolm, Scott, The Influence of Rising Commodity Prices on the Conservation Reserve Program (February 19, 2010). Economic Research Service, Paper No. ERR 110, February 2011. Available at SSRN: https://ssrn.com/abstract=2735039

Daniel Hellerstein (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS), Resource and Rural Economics Division ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5613 (Phone)
202-694-5756 (Fax)

Scott Malcolm

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5517 (Phone)

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