Land retirement programs remove land from crop production. In exchange for retiring land, producers receive rental or easement payments plus cost sharing and technical assistance to aid in the establishment of permanent cover. Economic use of the land is limited.

Land retirement has dominated Federal agricultural conservation spending since 1985. In fiscal year (FY) 2000, 90 percent of cash conservation payments made directly to producers were associated with land retirement, including rental and easement payments and cost sharing for establishment of permanent cover. Roughly 50 percent of all USDA conservation spending since 1985 has been for land retirement. Overall, USDA conservation spending also includes cost sharing and technical assistance for non-land retirement activities, public works, and a range of other administrative, data collection, and research activities. Nearly all Federally funded land retirement occurs in the context of two programs—the Conservation Reserve Program (CRP) and the Wetland Reserve Program (WRP).

Key changes
The CRP acreage cap is increased from 36.4 million acres to 39.2 million acres. The Congressional Budget Office (CBO) estimates increased spending of $1.5 billion over 10 years over April 2002 baseline spending (i.e., spending anticipated without the program change).

The WRP acreage cap is more than doubled, increasing by 1.2 million acres—1.075 million acres to 2.275 million. The Secretary of Agriculture is required (to the greatest extent practicable) to enroll 250,000 acres per year. CBO estimates increased spending of $1.5 billion over 10 years.

Summary of provisions

• The Conservation Reserve Program offers annual payments and cost sharing to establish long-term, resource-conserving cover on environmentally sensitive land. To participate, producers submit bids that specify practices to be used (e.g., grass, trees, wildlife habitat, filter strips) and the annual rental payment and cost sharing they are willing to accept for establishing these practices. Bids are ranked for selection using the Environmental Benefits Index (EBI), which incorporates six environmental factors (including soil erosion, water quality, and wildlife habitat) and contract cost. Contracts are for 10 to 15 years.
• The Wetlands Reserve Program provides cost sharing and/or long-term or permanent easements for restoration of wetlands on agricultural land. Permanent easements account for 70 percent of enrolled acreage. Wetlands can also be restored under 30-year easements or under 10-year agreements that provide only restoration cost sharing. When selecting among proposed restoration sites, restoration of wetland wildlife habitat is emphasized. Landowners retain land ownership and rights to recreational uses, such as hunting and fishing.

Economic implications
A total of 34.9 million acres are currently enrolled in CRP and WRP. The 2002 Farm Act expands authority for land retirement by a total of 4 million acres, an increase of nearly 11 percent over current authority. At present, an additional 2.6 million acres of previously available CRP enrollment is unused authority. Thus, existing authority for additional land retirement is 6.6 million acres, about 19 percent of current enrollment.

In addition to potential environmental benefits, retiring more land from crop production can help reduce commodity supply and help support commodity prices. The effect of retiring additional acres, however, will be modest—6.6 million acres is roughly 2 percent of harvested cropland. Because these programs are voluntary and not commodity-specific, enrollment and subsequent commodity output, price, and environmental effects will depend on who bids and how bids are selected. About 60 percent of currently enrolled acreage is in the Great Plains (ERS-defined Farm Resource Regions of the Prairie Gateway and Northern Great Plains, with about 30 percent of acreage in each region). If this pattern is maintained, a majority of new acres will be enrolled in the Plains, so that commodity supply and price effects could be more significant for crops grown in these regions (e.g., wheat).

Between 1.2 and 1.7 million acres of the new authority will be devoted to wetland restoration. The WRP enrollment cap will increase by 1.2 million acres. In the CRP, 500,000 acres of the 2.8-million-acre increase in the acreage cap could be used to enroll farmed wetlands and associated buffer acreage. Wetlands provide significant environmental benefits. Because land restored to wetland tends to be less productive than other cropland, the potential commodity supply and price effects of enrolling this land are likely to be quite small.

For more information...

• ERS Conservation and Environmental Policy Briefing Room—Covers a range of conservation and environmental policy topics and programs, including CRP, EQIP, and wetland policy.
• Q&As on land retirement and other conservation and environmental programs
• Economic Valuation of Environmental Benefits and the Targeting of Environmental Programs: The Case of the CRP
• Wetlands and Agriculture: Private Interests and Public Benefits
• Agricultural Resources and Environmental Indicators—Section 6 includes chapters on major conservation and environmental programs.

For program agency information...

• Farm Service Agency—Administers the Conservation Reserve Program (CRP), the Conservation Reserve Enhancement Program (CREP) and other conservation programs.
• Natural Resources Conservation Service—Administers the Environmental Quality Improvement Program (EQIP), Wetland Reserve Program (WRP), Wildlife Habitat Improvement Program (WHIP), Farmland Protection Program (FPP), and other conservation programs.