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New Conservation Theme Paper Outlines Alternatives to Current Policy

Agriculture Secretary Mike Johanns released a conservation program analysis paper authored by USDA economists. This is the second in a series of papers intended to provide factual information about specific topics and continue the national discussion about policy alternatives in preparation for the 2007 Farm Bill.

Johanns discussed the paper today at the World Pork Expo in Des Moines, Iowa. Johanns also announced the next subject for analysis will be rural development.

The conservation paper is authored by a team led by the Office of the USDA Chief Economist with input from the Economic Research Service, the Farm Service Agency and the Natural Resources and Conservation Service.

Laid out not as USDA policy proposals, but rather presented for public discussion, the paper outlines and describes several alternatives to the current approach. They are:

• Improve Existing Conservation Programs. This alternative includes four changes that could help improve the effectiveness and efficiency of current conservation programs. The modifications include: (1) improve targeting by making greater use of watershed and landscape approaches where problems exist; increase the use of payments based on performance; and where cost-share or other payments are used, increase use of market mechanisms, such as auctions, or bidding; (2) consolidate programs and delivery mechanisms that share common purposes and program incentives; (3) balance conservation investments among programs and purposes with attention to the tradeoff between working lands and conservation use programs; and (4) enhance contributions to energy management and alternative energy sources.

• Provide "Green Payments" to Enhance Environmental Benefits and Provide Income Support. Provide income support to producers in a manner that is consistent with WTO constraints, while providing substantial environmental benefits. The government would create a market for environmental gains, and if the payment a producer receives exceeds the cost of the conservation activities, the producer would have income supported, by "producing" the gains.

• Encourage Private Sector Markets for Environmental Services. New private sector environmental markets could complement or potentially replace existing federally supported conservation efforts. Actions that could develop these markets include: (1) generate demand for environmental goods and services by authorizing USDA and regulatory agencies to cooperate to ensure that environmental goods produced by agriculture can be used to offset regulatory requirements on other sectors; (2) authorize the development of consistent standards for estimating environmental goods and services provided by agriculture and forestry, including standards for data quality, verification, reporting, and estimation methods; (3) foster emerging markets by authorizing provision of investment capital, such as loans and grants, to stimulate markets.

• Expand Conservation Compliance or Establish a Standard of Care. This alternative would strengthen the link between price and income support, and perhaps other programs, and environmental benefits by expanding conservation compliance requirements.

The conservation paper is available at: USDA's Farm Bill Web site. Transcripts of the Farm Bill Forums and the 41 Farm Bill comment summary papers are also posted at www.usda.gov/farmbill.