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Efficiency of U.S. conservation-compliance program

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  • Govindasamy, Ramu
  • Huffman, Wallace

Abstract

Under the conservation‐compliance program, most of the individual producers are forced to cut their soil erosion to 7 t per acre annually irrespective of the marginal cost of controlling soil erosion. In a system where coupons to a ton of soil loss were issued to producers and traded, the marginal cost of controlling soil loss within each soil type and across different soil types would be equalized. An instrumental variable procedure was used to determine the effect of soil erosion on net profits. The results for Iowa show that there is considerable difference in the marginal opportunity cost of controlling soil erosion between soil types. By assigning one ton of erosion to Iowa soil type Downs (5‐10% slope) instead of Clarion (2‐5% slope), there is a savings of $5.00 per acre for the society as a whole. The tradable coupon system is not only efficient, but will also bring in more land under soil conservation.
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Suggested Citation

  • Govindasamy, Ramu & Huffman, Wallace, 1993. "Efficiency of U.S. conservation-compliance program," Agricultural Economics, Blackwell, vol. 8(2), pages 173-185, February.
    • Handle: RePEc:eee:agecon:v:8:y:1993:i:2:p:173-185
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    Cited by:

    1. Bernard Elyakime & Jean-François Bruno, 2000. "Gestion de la lutte contre une érosion de versant avec dégâts sur site public," Économie rurale, Programme National Persée, vol. 257(1), pages 67-77.
    2. Govindasamy, Ramu & Cochran, Mark J., 1995. "Implications of alternative environmental policies on phosphorus loading from poultry litter," Agricultural Economics, Blackwell, vol. 13(2), pages 137-148, November.

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