Regional impacts of the Conservation Reserve Program in the Southeast with conversion to trees: an application of input-output analysis

Abstract

Since the late 1970s many regions in the US have endured economic hardship caused by factors related to problems in agriculture. In the early 1980s high interest rates and decreasing farm prices resulted in expenses increasing relative to income for many farmers who had recently invested in new land or machinery. The strong dollar of the early to mid-eighties caused a sharp decline in the export demand for US agricultural products, thereby reducing farm prices. Persistent excess production depressed prices further, causing farm incomes to decline to their lowest real level since the Great Depression. In addition, federal subsidies to agriculture, which were increasing throughout the 1980s, were exacerbating the federal government's attempt to reduce the deficit. At the same time there was heightened concern for soil conservation and the environmental damage that agricultural runoff was causing to rivers and streams and other water bodies. The Conservation Reserve Program (CRP) was designed to both conserve soil and increase farm income. While the CRP has been justified on these two goals alone, it is nevertheless important that local decision-makers understand the impact of the program on their local economies. The CRP can also have a significant impact on rural communities. The purpose of this paper is to address the impact of the CRP on the local economy of a region dependent upon agriculture. The analysis emphasizes the impact of the CRP in a region that is being converted almost exclusively to trees. A regional input-output model is employed to evaluate these impacts. -from Authors