Economic and Environmental Implications of 1990 Farm Bill Sustainability Provisions in Water Quality Sensitive Areas

Animal Production: manure management, feed/forage
Crop Production: cover crops, multiple cropping, nutrient cycling, application rate management
Education and Training: decision support system, on-farm/ranch research
Farm Business Management: whole farm planning, budgets/cost and returns, risk management
Natural Resources/Environment: biodiversity, indicators, riparian buffers
Pest Management: chemical control
Production Systems: agroecosystems, integrated crop and livestock systems
Soil Management: soil analysis, organic matter
Sustainable Communities: sustainability measures

Abstract:

The overall goal of the research conducted under this project has been to determine whether economic incentives offered by three environmental provisions which were part of, or introduced at about the time of, the 1990 Farm Bill are sufficient to induce farmers in environmentally sensitive areas to adopt sustainable practices and systems. The three provisions were: (a) the Integrated Crop Management (ICM) cost-share program; (b) the Water Quality Incentive Program (WQIP); and (c) the Integrated Farm Management (IFM) program. The study area consists of nearly 100,000 acres and over 400 farms in three eastern South Dakota counties over the Big Sioux Aquifer; this is a USDA-designated “Water Quality Demonstration Project Area” where groundwater quality is a critical concern.

Five case farms in the study area were selected for analysis purposes -- one that has participated in the IFM program and four that have participated in either the ICM program or the WQIP. Crop enterprise and rotation budgets were developed for each of the five case farms. For the two ICM and the two WQIP cases, farming system profits were estimated “before” and “after” program participation. Nitrate leaching estimates also were made for the “before” and “after” scenarios. Additional possible practice and system changes were identified for each of the four farms, and both farm profitability and nitrate leaching estimates were made for each of those scenarios, as well. Estimates were made for “typical,” “wet,” and “dry” climate conditions.

Results indicated that changes in at least some farming practices and systems could yield both increased farm profits and improved groundwater quality. In three of four case farm studies, changes in farmers' practices associated with ICM or WQIP participation lead to increased profits (ranging from $6 to $30/acre) and very little change in nitrate leaching to groundwater. For all four case farms, there appears to be at least one additional practice or system change that could lead to increased profits and decreased nitrate leaching to groundwater. Some practice or system changes would involve tradeoffs between farm profits and groundwater quality, however. In those cases, difficult policy choices may be necessary where deterioration in water quality becomes critical. The results of this research help to illuminate the possible magnitudes of the tradeoffs.

Considering the profitability, capital intensity, complexity, and risk associated with the environmental initiatives examined in this study and with the practices and systems farmers are being encouraged to adopt, we conclude that: (1) operators of “large,” “medium,” and “small” sized farms may adopt several of the practice changes being promoted through WQIP and ICM; and (2) system changes under consideration are more likely to be adopted by operators of “medium” sized farms than by operators of “small” or “large” farms.

Project objectives:

The following objectives were as listed in the original project submission. No changes in the original objectives were made.

A. Identify and describe the nature of initial Integrated Farm Management (IFM), Integrated Crop Management (ICM), and Water Quality Incentive Program (WQIP) participation by farmers in a critical groundwater area of eastern South Dakota.

B. Develop whole-farm economic models for three to four typical farms in that area, and develop enterprise and whole-farm budgets for alternative farm plans that might be used on those farms to comply with IFM, ICM, and/or WQIP provisions.

C. Develop estimates of the effects on groundwater quality of shifting to the alternative farm plans in Objective B, giving special emphasis to reducing the likelihood of nitrate contamination.

D. Determine economic and environmental effects--for typical farms--of participating in the IFM, ICM, and WQIP provisions of the 1990 Farm Bill, using the whole-farm models and estimates developed for Objectives B and C.

E. Determine what further changes may be needed in the federal farm program in order to induce adoption of sustainable farming practices and systems with potential to satisfy groundwater quality objectives.

F. Extend results of the research on Objectives D and E to farmers and to policy makers.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.