Cost–Benefit Analysis of Soil Degradation and Restoration - Principles of Sustainable Soil Management in Agroecosystems - page 247

maintenance costs ( C mc ) and 50% of the cost for establishing a cover crop ( C ec ). The
summary of costs and benefits considered for CRP are presented in Table 10.4.
For this analysis, two different government rental payments ( F s ) are considered, a
high payment based on the average of all acres enrolled in Ohio CRP [regular CRP
plus land enrolled in the Conservation Reserve Enhancement Program (CREP)] and
a low payment based on just acres enrolled in the regular CRP. The cost for cover
crop establishment ( C ec ) is calculated based on the combined cost of seed, fertilizer,
herbicides, and seeding. The maintenance cost ( C mc ) is based on the cost of two
mows in the first year to aid in establishment, fertilizer, and additional seeding in
year 4, and mid-harvest management, which typically will involve disking of the
land. Both of these costs are shared, with the program paying 50% of the total cost.
Since some of the costs occur yearly throughout the length of the contract and others
occur only once or intermittently throughout the contract, all inputs for this analysis
are considered on a yearly basis.
The results of the financial analysis show annual financial returns to the farmer
ranging from $276.87 per hectare when rental payments are higher, to $193.97 per
hectare when they are lower. When farmers are considering enrollment, reenroll-
ment, or extension in CRP, it is expected that they will weigh the potential financial
benefits of putting their land in CRP versus RCP. For example, the large exit of
farmers from the program in 2008 was likely due to a combination of factors includ-
ing high crop prices, which increased the financial returns of RCP relative to CRP
(Streitfeld 2008; USDA-FSA 2008).
In order to understand the economic value of CRP, one must calculate the benefits
received from reduced soil erosion. This looks at the amount of soil erosion with
CRP compared to the amount of soil erosion that would be expected if the land was
in RCP. There is a wide array of private and social costs resulting from soil erosion.
On-site impacts include loss of fine soil particles, organic matter, and other nutrient

TABLE 10.4
Values for Financial Analysis of CRP

Yearly Price
($/ha/year)

Description Variable Total Price ($/ha) Frequency

Government
Rental payment

F s - High
F s - Low

$299.98
$217.09

Yearly $299.98

$217.09

On-site benefits B on $6.97 Yearly $6.97

Cover crop
establishment

1/2 C ec $177.30 a 1st year $17.73

Maintenance 1/2 C mc $123.50 b Total for

10 years

$12.35

Return to land R l - High

R l - Low

$276.87
$193.97

a Harvey 2000; University of Minnesota 2008; Ward and Freytag 2008; Ferrell and Sellers
2011; Prairie Seed Farms 2011; DTN 2012.
b USDA FSA 2006.