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

1993 Annual Report for LNC93-055

Project Type: Research and Education
Funds awarded in 1993: $82,650.00
Projected End Date: 12/31/1996
Matching Non-Federal Funds: $64,500.00
Region: North Central
State: South Dakota
Project Coordinator:
Thomas Dobbs
South Dakota State University

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


The overall goal of the this project was 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.

1) 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.
2) 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.
3) 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.
4) 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 2 and 3.
5) 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.
6) Extend results of the research on Objectives 4 and 5 to farmers and to policy makers.

The study area consists of nearly 100,000 acres and more than 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

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, it is concluded 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.

Farmer Adoption and Direct Impact:
A recent summary of farmer participation in the ICM program and the WQIP in the BSA area
indicated that, by 1995: a) 8,864 out of 100,000 project area acres had utilized integrated crop
management practices and b) 1,437 acres of irrigated cropland had utilized improved irrigation
water management practices. Integrated crop management practices were utilized on an
additional 46,221 acres in the BSA area without ICM or WQIP cost-share payments. Five case
study farmers were deeply involved in this project, and another farmer with extensive IFM
experience was involved in a consultant-advisor role. The economics newsletters, summarizing
economic and environmental findings of the study, directly or indirectly provided information to
many farmers. That newsletter has a mailing list of more than 450, including farmers, Extension
agents, news outlets, and others.