The use of emergency, disaster, and other ad hoc sources of income support to American farmers escalated dramatically between 1991 and 2002, increasing year-to-year uncertainty about the magnitude and distribution of farm program benefits. Ad hoc payment mechanisms, while meeting needs now apparently unsatisfied by other farm programs, have the potential to substitute for or conflict with agri-environmental and conservation program goals. Federal budget constraints likely make continued growth in ad hoc payment schemes unsustainable, raising questions about what will take their place. There is ample room for new research on how alternative farm program approaches and program combinations interact to affect stewardship behavior and associated agri-environmental outcomes.

In addition to supplying food and fiber, agriculture is a source of public goods and externalities. This article addresses two questions. First, do price and income support policies promote a multifunctional agriculture in an effective manner? Second, would policies targeted more directly at multifunctional attributes be more efficient than price and income support policies? The answer to the first question is no, at least for policies targeted at outputs (price supports, export subsidies, etc.). Public goods are not directly linked to production, but rather to land use and agricultural structures. Evidence in response to the second question is sketchier with respect to policies targeted at land.

In the last 20 years, both public and private expenditures on resource conservation and environmental protection have increased dramatically. However, there are numerous technical and political barriers to the efficient use of conservation funds. This paper discusses some of these barriers and approaches to overcoming them. It argues that ecosystem complexities such as threshold effects, ecosystem linkages, and spatial connections often mitigate against politically palatable criteria for resource allocation. Ignoring these complexities is likely to result in substantial efficiency losses. While challenges are daunting for the efficient management of conservation investments, payoff is potentially high for the use of sciences.

Environmental problems in agriculture have proven difficult to address due to the spatial heterogeneity and temporal variability intrinsic to agriculture. Agriculture is largely a struggle against nature; both its sustainability and the prospects for improving environmental performance and farm income simultaneously are thus inherently limited. Agriculture's high degree of variability makes direct regulation inefficient. Subsidies for improving environmental performance can have negative consequences and have proven ineffective in practice, due largely to bureaucratic culture. Pollution taxes should be the most effective and efficient form of policy. Interdisciplinary research is needed to provide models for performance evaluation.

Data on owner and land characteristics are used to analyze factors affecting participation decisions in Delaware's agricultural lands preservation program, federal commodity programs, and federal conservation programs. A trivariate probit model estimates a set of random utility models of participation. Participation decisions at the state and federal levels are found to be driven by many of the same observed factors, but uncorrelated in unobserved characteristics. The important exceptions are that owners of small parcels under development pressure and with parcels of relatively low environmental quality tend to enroll in commodity programs rather than preservation. In part, the complex policy environment may therefore limit the effectiveness of programs seeking to preserve parcels with the highest environmental quality or facing the greatest development pressure.

We estimate a system-of-equations model designed to measure the interaction between intertemporal patterns of changes in population, employment, and agricultural land densities. The model is applied to West Virginia for the 1990–1999 period. Consistent with recent findings on migration patterns, the results show that jobs followed people. New jobs were captured by commuters, while agricultural land losses were occurring in the commuters’ counties of origin or bedroom communities. However, counties with relatively more profitable and concentrated agricultural enterprises were less susceptible to alternative land use pressure than counties with less productive or fragmented agricultural land. Elasticities indicate population change is elastic, whereas employment and agricultural land density changes are inelastic to factors affecting them. Growth management, when combined with agricultural land retention programs, may be most effective at preserving agricultural land in high growth or potential growth areas.

Agricultural agencies have long offered agri-environmental payments that are inadequate to achieve water quality goals, and many state water quality agencies are considering point-nonpoint trading to achieve the needed pollution reductions. This analysis considers both targeted and nontargeted agri-environmental payment schemes, along with a trading program which is not spatially targeted. The degree of improved performance among these policies is found to depend on whether the programs are coordinated or not, whether double-dipping (i.e., when farmers are paid twice—once by each program—to undertake particular pollution control actions) is allowed, and whether the agri-environmental payments are targeted. Under coordination, efficiency gains only occur with double-dipping, so that both programs jointly influence farmers’ marginal decisions. Without coordination, double-dipping may increase or decrease efficiency, depending on how the agri-environmental policy is targeted. Finally, double-dipping may not solely benefit farmers, but can result in a transfer of agricultural subsidies to point sources.

Following Weitzman (1974), there is ample theoretical literature indicating that choice of pollution control instruments under conditions of uncertainty will affect the expected net benefits that can be realized from environmental protection. However, there is little empirical research on the ex ante efficiency of alternative instruments for controlling water, or other types of pollution, under uncertainty about costs and benefits. Using a simulation model that incorporates various sources of uncertainty, the ex ante efficiency of price and quantity controls applied to two alternative policy targets, fertilizer application rates and estimated excess nitrogen applications, are examined under varying assumptions about agricultural income support policies. Results indicate price instruments outperform quantity instruments. A tax on excess nitrogen substantially outperforms a fertilizer tax in the scenario with support programs, while the ranking is reversed in the scenario without support programs.

Agri-environmental programs, such as the Environmental Quality Incentives Program, provide payments to livestock and crop producers to generate broadly defined environmental benefits and to help them comply with federal water quality regulations, such as those that require manure nutrients generated on large animal feeding operations to be spread on cropland at no greater than agronomic rates. We couch these policy options in terms of agri-environmental “carrots” and regulatory “sticks,” respectively. The U.S. agricultural sector is likely to respond to these policies in a variety of ways. Simulation analysis suggests that meeting nutrient standards would result in decreased levels of animal production, increased prices for livestock and poultry products, increased levels of crop production, and water quality improvements. However, estimated impacts are not homogeneous across regions. In regions with relatively less cropland per ton of manure produced, the impacts of these policies are more pronounced.

Many conservation programs under the 2002 Farm Act address resource concerns such as water quality and aquatic communities in streams. Analyzing two such programs, simulated changes in agricultural practices decreased field-edge sediment losses by 25–31% in two geophysically distinct Minnesota watersheds. However, while in-stream sediment concentrations and lethal fisheries events decreased significantly in one watershed, there was no discernable improvement for the fisheries in the other, despite potentially spending over $100,000 annually in conservation payments. These results highlight the importance of performance-based conservation payments targeted to genuine resource concerns in watersheds and the value of integrated bioeconomic modeling of conservation programs.

The decision to adopt a potentially profitable but unfamiliar conservation technology is cast in a multi-period Bayesian framework. Specifically, dairy farmers who are both risk-averse and susceptible to peer group influence progressively learn about the true impact of adopting reduced phosphorus dairy diets on their income distributions as they repeatedly experiment with this new technology. Empirically calibrated simulations are used to examine the effects of a voluntary green payment program on the rate of technological diffusion. Results suggest that (a) green payments can accelerate learning and produce significant, permanent changes in behavior relatively quickly and for a reasonable cost; (b) shorter contracts offering larger incentives may be more cost-effective when learning plays an important role in behavioral change; and (c) unknown prior beliefs can reduce the efficacy of a green payment program, implying efforts to verify these priors or to ensure against them by increasing the payment level may be worthwhile.

There is growing interest in green payments subsidizing conservation measures on working farmland based on the premise that they have positive effects on the environment and agriculture simultaneously without causing international trade distortions. This paper uses a Ricardian land market equilibrium model to examine the impacts of green payments. The analysis shows green payments can worsen ambient pollution damage by subsidizing the expansion of more intensive crop cultivation. Some forms of green can increase cultivation intensity (and thus environmental damage) as well. These adverse effects can be avoided by careful targeting, but such targeting is likely to be quite difficult.

This study investigates the environmental impacts of several forms of policies that offer farmers subsides in return for the adoption of conservation tillage. The policies differ as to whether the tillage practice or one of several environmental benefits is targeted. We develop an Environmental Lorenz Curve which fully represents the performance of the targeting policies, and show that this curve can be directly used to help select the optimal targeting strategy for special classes of social welfare functions. The model is applied to the state of Iowa.