On how environmental stringency influences adoption of best management practices in agriculture

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Abstract

There are relatively few Federal environmental regulations that influence agricultural production in the US. However, many local and state environmental rules may influence the management practices on US farms as might interactions between urban population centers and agricultural producers. Detailed analysis of corn farms gives insight into these relationships and suggests that stringent environmental regulations could increase the likelihood of adoption of certain conservation practices, all else being constant, but that the interaction between urban populations has less of an effect on the adoption decisions.

Introduction

Agricultural production affects the environment in many ways. Some impacts are positive—pleasant vistas and provision of wildlife habitat. However, many impacts are not positive—chemical and sediment runoff into lakes, streams, and estuaries. At the state and federal level policies seek to encourage the positive impacts of crop production and to lessen its negative impacts. These typically rely on voluntary conservation programs, which provide education, technical assistance, and incentive payments to farmers for such things as retiring environmentally sensitive lands or adopting best management practices (BMPs) on land that remains in production. BMPs such as comprehensive nutrient management planning are designed to reduce the potential for pollution runoff from cropland.

Voluntary approaches can succeed when farmers’ concerns over environmental quality reflect those of society. When this is not the case and production decisions are based solely on private benefits, then farmers could under-invest in conservation if the costs of implementing and managing conservation practices are higher than expected returns, including conservation incentive payments.

To the best of our knowledge, there are few studies that analyze the impact of a state's environmental stringency and interaction with non-farm populations on the use of BMPs. In this paper, we examine whether evidence suggests that farmers in states with relatively strong environmental laws are adopting environmental-quality protecting management practices at higher rates than elsewhere, even when the environmental laws are not aimed directly at crop production. This could be an indication that information about impaired environmental quality and the perceived likelihood of possible regulation in the future could spur farmers to adopt practices they ordinarily might not. Moreover, we examine whether proximity to urban areas influences the production practices of the farmers. Demand for environmental quality at the rural–urban fringe, expressed through citizen complaints over farming practices and local ordinances to reduce rural–urban conflicts, might spur the adoption of BMPs as a means of reducing potential conflicts with non-farm residents.

Accordingly, the main hypothesis we test is whether farmers in states with relatively strong environmental laws or where there is a higher interaction with urban population centers are more likely to adopt BMPs at higher rates than elsewhere. We examine this question in light of the fact that farmers are likely to bundle one or more management practices from a larger set of available BMPs. Our paper starts with a literature review of environmental stringency, urban proximity, agricultural production and adoption of BMPs. Then, using data on corn production from the 2001 Agricultural Resource Management Study (ARMS) survey of USDA, we utilize a multivariate probit model to estimate the likelihood of the farmers’ adoption of BMPs. This estimation procedure enables the identification of correlations between BMP choices. We conclude with a discussion of the results and implications for future research.

Section snippets

Environmental stringency

The influence of environmental regulations on production in manufacturing and some other industries has been studied by various researchers (e.g., Becker and Henderson, 1999; Sun and Zhang, 2001). The impacts of environmental regulations on agriculture production have also been analyzed. Isik (2004) assessed the relationship between environmental regulation and spatial structure of the US dairy sector. His study concludes that counties with strict environmental regulations are likely to lose

Data

In our analysis we use farm-level agricultural and economic data from the 2001 USDA Agricultural Resource Management Survey (ARMS) collected from corn producers (Banker et al., 2001). Corn was planted on approximately 76 million acres of land base in 2001, and generated approximately $19 billion in returns for farmers (USDA-ERS, 2003). Because of both the coverage and the relative intensity of production on corn acres, the environmental management practices of corn producers may have a

Model

Our estimation examines a set of interrelated conservation practices, where it is likely that the decision to adopt one practice is correlated to other conservation management decisions. Here, we examine the use of conservation tillage, or having residue cover of at least 30% at the time of planting (residue); building grassed waterways (grass), which help filter field runoff from drainage channels; use of filter strips at the edge of the corn field (strip), which helps reduce runoff from farm

Results

The Wald test suggests that our estimated model is significant (Table 3), and the likelihood ratio test supports our model assumption that the choices of BMPs are not independent of each other (Table 4). Most of the variables had the expected signs.

Estimation results from the multivariate probit model (Table 3) suggest that share of agricultural production in total GDP of a state (agshare) tends to increase the probability of adoption of conservation tillage, nutrient soil testing, and yield

Discussion

Turning to our hypotheses that environmental stringency or contact with non-farming populations increases BMP adoption we find in our results only partial confirmation. The results suggest that the adoption of only two practices, grassed waterways and an erosion plan, were influenced by state-level environmental stringency as represented by index2000. Grassed waterways are an effective practice for filtering sediment and chemicals for field runoff, thus protecting water resources. It is

Conclusions

Our analysis concludes that environmental stringency could influence the adoption of some conservation practices. However, while environmental stringency could accelerate the adoption of environmental-quality protecting practices, we cannot say whether it provides enough of an incentive for policies based on voluntary adoption to adequately protect water quality. The level of adoption necessary to achieve water quality goals may not be possible without stronger incentives.

In our study, we did

Acknowledgments

The views expressed in this paper are those of the authors and not necessarily those of the University of Wyoming or the US Department of Agriculture. The authors wish to thank Daniel Hellerstein, David Aadland, and the anonymous reviewers for their helpful comments.

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