THREE ESSAYS ON THE ECONOMIC AND ENVIRONMENTAL IMPLICATIONS OF AGRICULTURAL CONSERVATION INCENTIVES AT THE FIELD, REGIONAL, AND GLOBAL SCALES

Abstract

Agricultural conservation policies are central to efforts to address the dual challenges of climate change mitigation and rural economic sustainability. Agriculture contributes significantly to greenhouse gas (GHG) emissions, particularly through soil-based processes, leading to the expansion of agri-environmental incentive programs aimed at encouraging the adoption of climate-smart practices. Evaluating the effectiveness of these policies requires careful consideration of economic feasibility, producer behavior, market interactions, and broader socio-economic impacts. This dissertation consists of three essays that use quantitative methods, integrating econometric models, biophysical simulations, and general equilibrium analysis, to examine these dimensions. Together, the essays underscore the importance of incorporating market feedbacks, accounting for international emissions leakage, and evaluating local labor market outcomes to design agri-environmental policies that are both environmentally effective and economically inclusive.In the first essay (chapter 2) of this dissertation, we examine how endogenous crop prices affect estimates of greenhouse gas abatement supply on corn and soybean acres at the farm level under alternative climate change scenarios in the U.S. Corn Belt. We combine a discrete choice model of farmer behavior with a spatially explicit biogeochemical model of GHG emissions and link this model to crop demand curves to allow for price feedbacks. Producers are offered payments from the GHG reductions achieved by adopting climate-smart practices, no-till, cover crops, and reduced nitrogen application, and their adoption behavior is simulated across varying carbon price and climate scenarios. Results indicate that accounting for endogenous prices increases estimated abatement, particularly from nitrous oxide reductions, by up to 18 percent at a carbon price of $190t CO2e under the extreme climate scenario and by 25 percent under the sustainability scenario, relative to estimates based on exogenous prices. Results underscore the importance of considering market interactions when constructing abatement cost functions. In the second essay (chapter 3), we investigate emissions leakage from domestic conservation policy at the global scale by modeling the worldwide GHG emissions implications of expanding the U.S. Conservation Reserve Program (CRP). While CRP has been considered as a policy that can reduce domestic GHG emissions, our results show that it also generates significant spillover effects via global market adjustments. For an additional 4 million acres (1.6 million hectares) enrolled in CRP, approximately 236 thousand hectares of forest are converted to agriculture within the U.S., while cropland expands by 205 thousand hectares outside the U.S. due to market-driven land use changes. These spillover effects fully offset the mitigation achieved on the enrolled cropland, resulting in over 200% global emissions leakage. These findings underscore the importance of incorporating international leakage and market-mediated effects into the evaluation of land-based climate policies. The study contributes a novel framework for assessing conservation policies in a globally integrated economy and highlights the need for internationally coordinated approaches to ensure environmental effectiveness. In the third essay (chapter 4), we assess the regional-level economic effects of agri-environmental programs by examining the employment trade-offs between land retirement and working lands programs. We use panel data and a fixed effect model to address the endogeneity of EQIP and CRP enrollment. We deploy alternative identification strategies and controls to test the robustness of our results. Findings indicate that both cropland retirement and working lands programs are associated with higher local employment levels, and that reallocating conservation dollars from temporary retirement to working lands at the state level increases overall employment in each rural county by 0.4% per million dollars, with agricultural jobs increasing faster than non-agricultural jobs. These results offer valuable insights for policymakers seeking to generate environmental benefits while supporting rural employment.