Nathan P. Hendricks (Department of Agricultural Economics, Kansas State University)
One of the key factors that determines the cost-effectiveness of payment for ecosystem services programs is the extent to which the payments induce additional benefits compared to the counterfactual of no payment. We study the additionality of the Conservation Reserve Program (CRP) in the U.S., which pays farms annual rental payments for establishing or maintaining a desired land cover. Two of the programs within CRP operate as reverse auctions: (i) the General signup pays to retire cropland to noncropland, and (ii) the Grasslands signup pays to avoid cropland conversion of existing grasslands. Recent studies exploit the plausibly unknown cutoff score of the auction that determines acceptance and find a relatively small fraction of additionality in the General signup. In this paper, we revisit the additionality estimates of the General signup to better understand heterogeneity of non-additionality, especially between new enrollees that must change land use versus reenrolled contracts that maintain land use. We are also the first study to estimate the additionality of the Grasslands program that pays farms to maintain existing grasslands.