The Influence of Rising Commodity Prices on the Conservation Reserve Program
by Daniel Hellerstein
and Scott Malcolm
Economic Research Report No. (ERR-110) 44 pp, February 2011
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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
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