Evaluating the Tradeoff between Cost-Effectiveness and Participation in Agricultural Conservation Programs
AAEA members release new research in AJAE
As USDA is investing over $3 billion in climate-smart agriculture largely through the voluntary cost-share payments program, these efforts need to pay attention to both the cost-effectiveness as well as the participation for these programs to achieve the goal.
New research titled “Evaluating the Tradeoff between Cost-Effectiveness and Participation in Agricultural Conservation Programs” was recently published in AJAE. The authors – Gregory Howard from East Carolina University, Wendong Zhang from Cornell University, Adriana Valcu-Lisman from the USDA – Economic Research Service and Philip Gassman from Iowa Sate Univeristy – examine how changing the payment mechanism of agricultural conservation contracts from a uniform cost share to a reverse auction will impact both the cost-effectiveness of the contracts and farmer willingness to participate in the programs.
The authors say, “We find that reverse auction designs can lead to meaningful improvements in the cost effectiveness of contracts. We also find that, when conservation contract budgets are relatively small, there is no discernable impact on farmer participation, but as budgets scope of conservation initiatives increase, reverse auctions can reduce farmer participation relative to uniform cost shares.”
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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.
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