VARIABLE COST-SHARING LEVEL PROGRAM IMPLICATIONS FOR KENTUCKY'S JACKSON PURCHASE AREA: AN ECONOMIC AND POLICY STUDY OF CASH GRAIN PRODUCTION CONSIDERING SOIL DEPLETION

摘要

The existence of environmental and conservation problems which reduce the productivity of water and land resources or degrade the environment had been a concern of the U.S. Department of Agriculture since the 1930s. Farmers have been provided with educational, technical and financial assistance through the Soil Conservation Service and Agricultural Stabilization and Conservation Service to promote conversion to less erosive farming practices. During the 1981 national evaluation of the Agricultural Conservation Program by the Agricultural Stabilization and Conservation Service, the Variable Cost/Sharing Level Program was initiated in an effort to establish higher cost-share rates for soil conservation practices which achieve the largest reductions in soil loss. The program's assignment of variable cost-share rates is solely based on physical measures, i.e. pre-conversion and post-conversion erosion rate calculations.;The purpose of this research is to selectively explore the relationship between the Variable Cost/Share Level Program cost-sharing rates and the changes in income which result from changing resource management systems to achieve soil erosion control. The research will formulate a procedure for incorporating economic criteria in a variable rate cost-sharing format and discuss the policy implications of the use of the procedure. Short-term, partial enterprise budgets are developed for corn, wheat and soybeans. Resource Management Systems for a corn followed by double-cropped wheat with soybeans rotation are established for conventional, conservation and no till tillage methods in combination with up and down, contouring, contour stripcropping and parallel terracing conservation practices on 11 erosive soil groups for Kentucky's Jackson Purchase Area. Representative soils within soil groups are selected for economic analysis of long-term productivity change attributable to erosion using a Soil Depletion Estimates model program.;The results show four economically rational ways erosion control may be achieved: (1) net return change may be positive, (2) Program cost-sharing may offset net return loss, (3) the depletion investment annuity may offset net return loss and (4) the depletion investment annuity plus Program cost-sharing may offset net returns loss. The results demonstrate the potential for Program cost-sharing in the short-term leading to a long-term income losing conversion. The proposed variable rate cost-sharing method is shown to effectively encourage conversions to the more profitable conversion options.