Submitted to: American Agricultural Economics Association Meeting
Publication Type: Abstract Only
Publication Acceptance Date: August 11, 1999
Publication Date: N/A
Technical Abstract: The Environmental Quality Incentives Program (EQIP) was designed to be an efficient voluntary incentives program resulting in the highest environmental benefits per federal dollar spent. Experiences in implementing EQIP in North Dakota indicate that estimation and measurement of environmental benefits in a cost-effective manner is a significant challenge for the program to perform as designed. EQIP funds are allocate to geographic areas and to specific contracts within these geographic areas based on identified resource needs and expected environmental benefits. The more accurate the resource information is, the better EQIP funds can be targeted to achieve the highest environmental benefits per federal dollar. However, accurately measuring and estimating environmental benefits is itself costly, so the cost of measuring and estimating environmental benefits should be balanced with the benefits of better targeting EQIP dollars. One aspect of the program that helps insure the best use of cost share dollars within the priority area is that producers who want to enroll in EQIP must compete with other applicants for funding. This competitive aspect of the program sets up a quasi-market for environmental benefits within a priority area. Experience in North Dakota indicates that this quasi-market causes producers to offer a higher amount of environmental benefits for the program dollars they receive than they would without competition.