EFFECTS OF FEDERAL CONSERVATION PAYMENTS ON FERTILIZER USE IN THE MIDWEST

Riva C. H. Denny, M.S.

Doctoral Student

Department of Sociology

Michigan State University

RSS 2014

New Orleans, LA

Outline

• Introduction•Research Question•Hypotheses•Data and Methods•Findings•Conclusion•Limitations•Next steps

•Agriculture is a significant source of water impairment due to soil and nutrient run-off (EPA 2014)• Agriculture’s contributions to threatened or impaired water bodies:• Leading cause for rivers and streams (13%)• 2nd leading cause for wetlands (18%)• 3rd leading cause for lakes, reservoirs and ponds (5%)

Introduction

Effects of Conservation Programs

• Voluntary USDA conservation programs seek to reduce these effects

• Have been found to be effective (NRCS 2011; NRCS 2012)

• Does reduced run-off

lead to reduced

fertilizer application?

Research Question

Do federal conservation payments, by encouraging farmers to adopt certain practices, ultimately have the effect of reducing fertilizer use?

METHODS• Data and Sample• Hypotheses• Variables and Measures• Statistical Methods

Hypothesis 1

• The greater the amount of Federal conservation payments made to farmers in a county the greater the number of farms using conservation practices

Conservation $$$ Conservation Farms+

Hypothesis 2

• The greater the amount of Federal conservation payments made to farmers in a county the lower the amount of land treated with fertilizer in the county (a decrease in the extensiveness of use)

Conservation $$$ Fertilized Acres-

Hypothesis 3

• The greater the amount of Federal conservation payments made to farmers in a county the lower the amount of fertilizer used per acre in the county (a decrease in the intensiveness of use)

Conservation $$$ Fertilizer per Acre-

Data and Sample

• 2007 Census of Agriculture• USDA’s NRCS via the Environmental Working Group• Conservation payments variable

• County level data for Iowa, Illinois, and Michigan • Initial N = 284• States chosen due to interest for another project

Dependent Variables*• Conservation Farms

• The number of farms that reported using “conservation farming methods”

• Fertilized Acres• The number of farmland acres in the county that were treated

with commercial fertilizer, lime, and soil conditioners

• Fertilizer per Acre• The dollars spent on fertilizer per acre fertilized• A measure of the average intensity of fertilizer use per acre

*Descriptive statistics available upon request

Independent Variables*• Conservation Payments—in $1,000 of dollars

• Farmland Value—average estimated market value of land and buildings per acre in $1,000 of dollars, a proxy for land quality

• Average Farmer Age—of the principle operator

• Farmland Area—acres of farmland in the county

• Number of Farms

• Conservation Farms—The number of farms that reported using “conservation farming methods”

*Descriptive statistics available upon request

Conservation Payments

•Conservation payments dominated by CRP in this sample CRP

79%

EQIP8%

WRP3%

Other10%

Conservation Payment Programs• Conservation Reserve Program: annual rental payment

for farmers removing environmentally sensitive land from agricultural production and planting species that will improve environmental quality (FSA 2014)

• Wetland Reserve Program: technical and financial support to landowners to protect, restore, and enhance wetlands on their property (NRCS 2014b)

• Environmental Quality Improvement Program: “financial assistance to help plan and implement conservation practices that address natural resource concerns and for opportunities to improve soil, water, plant, animal, air and related resources on agricultural land and non-industrial private forestland” (NRCS 2014a)

• Includes the National Water Quality Initiative: A national EQIP initiative that “helps farmers and ranchers implement conservation systems to reduce nitrogen, phosphorous, sediment and pathogen contributions from agricultural land in specific approved watershed” (NRCS 2014a)

Conservation Payment Programs

Statistical Methods

• Ordinary Least Squares (OLS) regression• Stata12• Assumptions met enough

FINDINGS

Conservation Farms, OLS Coefficients (N=275)

Conservation Payments 0.014** Farmland Value 5.743 Average Farmer Age -6.944** Farmland Area 0.001*** Number of Farms 0.232*** Intercept 332.536* F-Test 449.090*** Adjusted R2 0.891 Two-tailed test *p < 0.05 **p < 0.01 ***p < 0.001

Fertilized Acres, OLS Coefficients (N=275)Conservation Payments -15.653*** -16.348*** Farmland Value 5,315.659*** 5,020.172*** Average Farmer Age -1,944.738* -1,587.440* Farmland Area 0.877*** 0.845*** Number of Farms -23.053*** -35.003*** Conservation Farms 51.455** Intercept 75,310.530 58,199.770 F-Test 1,644.010*** 1,402.990*** Adjusted R2 0.968 0.969 Max VIF 2.580 9.350 Two-tailed test *p < 0.05 **p < 0.01 ***p < 0.001

Fertilizer per Acre, OLS Coefficients (N=275)Conservation Payments -0.001 -0.001 Farmland Value 6.090*** 6.270*** Average Farmer Age -0.177 -0.394 Farmland Area 6.030x10-6 2.56x10-5* Number of Farms 0.005 0.012** Conservation Farms -0.031** Intercept 57.344* 67.759* F-Test 21.680*** 19.920***

Adjusted R2 0.274 0.293 Max VIF 2.580 9.350 Two-tailed test *p < 0.05 **p < 0.01 ***p < 0.001

Conclusions

Hypothesis 1

Hypothesis 2

Hypothesis 3

Conservation $$$ Conservation Farms+

Conservation $$$ Fertilized Acres-

Conservation $$$ Fertilizer per Acre-

Conclusions

• While conservation payments are associated with increased use (extensiveness) of conservation practices, which have been found to reduce nutrient run-off, these do not clearly translate into reduced fertilizer application—at least not in this sample

Limitations

• Small sample size• Variables of interest had to be left out

• Model appropriateness?

• Only 1 year considered

• Imprecise variables

Next Steps

•Use 2012 Ag Census data•More detailed data on conservation payments—how much from which programs?

• Include more states•Structural equation modeling?

References• FSA. 2014. "Conservation Programs." USDA Farm Service Agency. Retrieved July 29, 2014 (

http://www.fsa.usda.gov/FSA/webapp?area=home&subject=copr&topic=landing).• EPA. 2014. "Watershed Assessment, Tracking & Environmental Results, National Summary of State Information."

US Environmental Protection Agency. Retrieved July 30, 2014 (http://ofmpub.epa.gov/waters10/attains_nation_cy.control).

• Nickerson, Cynthia, Robert Ebel, Allison Borchers, and Fernando Carriazo. 2011. Major Uses of Land in the United States, 2007. Economic Information Bulletin Number 89. Washington, DC: USDA, Economic Research Service. Retrieved February 21, 2013 (http://www.ers.usda.gov/media/188404/eib89_2_.pdf).

• NRCS Conservation Effects Assessment Project (CEAP) Cropland Modeling Team. 2011. Assessment of the Effects of Conservation Practices on Cultivated Cropland in the Great Lakes Region. Washington, DC: USDA, Natural Resources Conservation Service. Retrieved July 30, 2014 (http://www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/stelprdb1045480.pdf).

• NRCS Conservation Effects Assessment Project (CEAP) Cropland Modeling Team. 2012. Assessment of the Effects of Conservation Practices on Cultivated Cropland in the Upper Mississippi River Basin. Washington, DC: USDA Natural Resources Conservation Service. Retrieved July 30, 2014 (http://www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/stelprdb1042093.pdf).

• NRCS. 2014a. "Environmental Quality Incentives Program." USDA Natural Resource Conservation Service. Retrieved July 29, 2014 (http://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/programs/financial/eqip/?&cid=stelprdb104 4009).

• NRCS. 2014b. "Wetlands Reserve Program." USDA Natural Resource Conservation Service. Retrieved July 29, 2014 (http://www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/easements/wetlands/).

THANK YOU!

QUESTION?Riva C. H. Denny

Michigan State University

Department of Sociology

509 E. Circle Dr., Rm 316 Berkey

East Lansing, MI 48824-1111

rchdenny@msu.edu