Working Lands Programs Food, Conservation, and Energy Act of 2008 Jim Pease Dept of Agricultural & Applied Economics Virginia Tech 540/

2 From Aillery, M. “Contrasting Working-land and Land Retirement Programs, Economic Brief No. 4, ERS/USDA, March 2006

Principal “Working Lands” Programs Environmental Quality Incentives Program (EQIP). Funding (“to the maximum extent practicable”) FY is $7.325 billion Conservation Stewardship Program (CSP). Funding (“to the maximum extent practicable”) for million acres enrollment per year over FY at average contract payment of $18/acre 3

Environmental Quality Incentives Program (EQIP) 4

Voluntary program providing financial and technical assistance to protect water, air and soil quality and wildlife habitat by implementation and management of conservation practices on livestock and cropping operations Conservation practices include: – Structural – Land management – Vegetative – Forest management – Conservation plan development Emphasis on assisting livestock operations to meet regulatory requirements, available nationally, no previous conservation practice required 5

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EQIP Principal Changes Increased funding FY to $7.325 billion Allows practices related to: – livestock air quality concerns – organic transition or production – water conservation/irrigation efficiency practices – comprehensive Nutrient Management Plan Agricultural Water Enhancement Program to fund water quality and water conservation activities Payment limit reduced to $300,000 Modifies evaluation process of contract proposals 7

EQIP Land Eligibility – Land which agricultural commodities, livestock, or forest-related products are grown, including cropland, grassland, rangeland, and pasture land – Other private agricultural land, such as cropped woodland, marshes, or agricultural land used for livestock production – Nonindustrial private forest land 8

Ranking of EQIP Applications Based on: Cost-effective Comprehensive and effective Fulfill EQIP purpose Improve conservation practices/ systems (similar crop/livestock operations grouped for evaluation) 9

EQIP Contracts Term 1-10 years Payments cover costs of structures/practices (max 75%) and income foregone (max 100%) – For limited resource, beginning, or socially disadvantaged producers, payments for costs incurred are lesser of 25% over the regular rate, or 90% Payment limit $300,000/person over 6 years 10

Conservation Stewardship Program (CSP) 11

Conservation Stewardship Program (CSP) Voluntary program providing payments for maintenance/adoption of conservation practices that – Address a state-defined resource concern – Are operated beyond a threshold resource/environmental management level Replaces/revamps the 2002 Conservation Security Program beginning FY2009 – Tiered payment system eliminated – Watershed-based eligibility eliminated 12

CSP Land Eligibility – Private agricultural land, including cropland, grassland, prairie land, improved pasture, rangeland, and agro-forestry land – Forested land incidental to agricultural operation – Other private agricultural land, such as cropped woodland, marshes, or agricultural land used for livestock production – Tribal agricultural land – Nonindustrial private forest land 13

CSP Priority Resource Concern 3-5 resource concerns identified by NRCS in consultation with a state Technical Committee as priority for a watershed or other area within the state 14

CSP Funding Allocation Allocation by state based on: – proportion of national eligible acres – conservation needs in each state – expected effectiveness of program implementation – other regional equity considerations. Requirement of 5% funding for beginning producers and 5% for socially disadvantaged producers 15

Conservation Stewardship Plan Must have met threshold of at least 1 resource concern Must propose to meet/exceed stewardship threshold of at least 1 priority resource concern by installing/adopting conservation activities and improving/maintaining /managing conservation activities 16

Ranking of CSP Applications Based on: Level of conservation treatment Effectiveness of proposed conservation treatment on priority resource concerns Number of priority resource concerns proposed Other resource concerns addressed Benefit/cost relative to other proposals 17

CSP Contracts Continuous enrollment 5-year term, renewable for another 5 Annual payments based on costs incurred, income forgone, and environmental benefits Specialty crop and organic producers may participate CSP payments now allowed for: – organic certification – on-farm conservation research/demonstration or pilot testing Supplemental CSP payments for resource- conserving crop rotations Payment limitation $200,000 total over 5 years 18

Critical Elements of Working Lands Programs Annual Congressional appropriations? Program access, benefit/cost affected by state allocation EQIP:Program requests exceed funding 4:1 CSP:USDA “reliable conservation measurement tools”? Technical assistance availability? “Stickiness” of conservation practices after contract expires? Enrollment with current high commodity prices? 19

Final Notes Environmental Services Markets: Mandate for USDA to develop technical guidelines for measuring and reporting environmental services on farm, ranch, and forest lands; and guidelines for registry of benefits; priority for emerging carbon markets Chesapeake Bay Program watershed funding $188m FY