4. Conservation Payments

The 2018 Farm Bill allocated on average approximately $5.8 billion annually to USDA’s conservation programs, with the majority of that funding going to CRP, EQIP, and CSP.¹⁸⁶ This section examines these three conservation programs and recommends both executive and legislative actions that would ensure they more effectively address climate change.

Conservation Reserve Program. Under the 2018 Farm Bill, 34% of conservation spending went to CRP, which pays farmers an annual rental fee to take environmentally sensitive land out of agricultural production for 10-15 years, which generally improves the quality of that land, as well as the soil, air, wildlife habitat, and climate for at least the duration of the contract.¹⁸⁷ Fewer than 22 million acres (out of a possible 27 million acres, the cap set out in the Farm Bill) were enrolled in the program in May 2020.¹⁸⁸ USDA estimated that CRP sequestered more than 43 MMT CO₂ eq. in 2014, about 7% of agriculture’s greenhouse gas emissions.¹⁸⁹ If accurate, this would translate into about 1.8 metric tons CO₂ sequestered per acre (or 4.5 tons per hectare).¹⁹⁰

CRP’s advertised climate benefits are often temporary, however. After their CRP contracts expire, many producers bring their CRP acres back into production, quickly releasing any carbon stored during the term of the contract.¹⁹¹ Between 2006 and 2014, for example, an estimated 14 million acres

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previously protected by CRP were returned to agricultural production.¹⁹² Additionally, if any of the crop production on CRP land is displaced to other land, especially to newly converted land, the CRP-related climate benefits would be illusory.

There have also been proposals to expand certain productive activities on CRP land in order to increase interest in the program;¹⁹⁴ Congress should consider this only for activities with proven climate benefits, such as agroforestry. In addition, legislators should reform CRP so that funding is directed to areas of higher ecological concern—land that consists of high-quality habitat, diverse native covers, and grassland at high risk of conversion—to maximize the conservation and climate benefits of the program.

Continuous CRP (CCRP), which pays farmers to plant conservation buffers or wildlife habitat on environmentally sensitive land, provides a model for Congress to expand on. The 2018 Farm Bill authorizes the FSA to offer CCRP enrollees a one-time incentive payment of up to 50% of the cost of establishing the practice, including seed costs.¹⁹⁵ However, FSA has offered only a 5% cost share during the past few sign-up periods.¹⁹⁶ USDA should instead offer the maximum permitted cost share under the Farm Bill for the next sign-up. Moreover, FSA has the authority to offer an additional rental rate incentive that provides landowners a supplemental payment of up to 20% of the annual rental payment for certain high-priority continuous practices.¹⁹⁷ USDA should use this flexibility to further incentivize the practices with the highest climate benefits.

The CLEAR30 pilot program—based on a more limited CCRP initiative started in 2016¹⁹⁸—offers farmers and landowners an opportunity to enroll in a 30-year CRP contract. However, CLEAR30 is limited to expiring CRP water quality practice contracts, mostly for riparian, wildlife habitat, or wetland buffers.¹⁹⁹ USDA further limited it to contracts in the Great Lakes

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and Chesapeake Bay regions.²⁰⁰ FSA should strengthen this pilot by allowing any eligible producer in the country to enroll in CLEAR30, while Congress should expand the program to all CRP contracts.

USDA should also prioritize the use of native vegetation on land enrolled where ecologically appropriate, which would likely increase and make more robust soil carbon sequestration, as well as improve native habitat for wildlife and pollinators. USDA should similarly prioritize applications for properties of higher ecological concern—land that consists of high-quality habitat, diverse native covers, and grassland at high risk of conversion.

In addition, USDA should increase incentive payments for participation. Under the Farm Bill, annual rental rates are capped at 85% of the average county soil rental rate for CRP enrollment and at 90% for CCRP enrollment.²⁰¹ Congress should remove the cap on rental rates to keep CRP attractive to landowners and, until it does so, USDA should expand its use of these discretionary incentives, including adjustments to the county soil rental rate for soil productivity, in order to boost payments. Similarly, while the Farm Bill currently limits CRP enrollment to no more than 25% of a county’s cropland,²⁰² until Congress lifts that, USDA should use its waiver authority to the maximum extent possible to increase overall CRP enrollment.

Congress should also strengthen the Conservation Reserve Enhancement Program (CREP), which gives farmers higher CRP payments for participating in targeted conservation efforts organized by state and local officials.²⁰³ Due to its higher annual payments, which are on average almost three times as high as general CRP payments,²⁰⁴ CREP has remained popular with farmers even when increasing commodity prices have reduced acreage reenrollment in CRP overall.²⁰⁵ Congress should increase funding for the program while prioritizing land with climate mitigation potential like forested land or herbaceous cover in order to enhance its climate benefits.

Environmental Quality Incentives Program.

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by USDA’s NRCS, which was established by Congress in 1936 to reduce “the wastage of soil and moisture resources on farm, grazing, and forest lands.”²⁰⁷ Congress has authorized NRCS to pay producers up to 75% of the costs associated with the development and implementation of a new conservation practice and/or 100% of the income foregone by the producer as a result of a new practice.²⁰⁸ Producers cannot receive funding for a preexisting practice through EQIP, regardless of how environmentally beneficial it may be. NRCS is required by statute to allocate at least 50% of its EQIP payments to livestock producers; Congress should reduce this percentage to advantage less carbon-intensive products.²⁰⁹

Funding decisions are made through a process that combines national, state, and local priorities. National priorities are determined by NRCS in accordance with the program’s statutory guidelines, which require the agency to finance practices that promote one or more of the following:

• Soil health

• Water quality and quantity improvement

• Nutrient management

• Pest management

• Air quality improvement

• Wildlife habitat development

• Invasive species management²¹⁰

State priorities are set by the head NRCS administrator of each state in consultation with stakeholders, while local priorities are set by “local working groups,” composed of stakeholders such as producers and industry representatives. Given that farmers using sustainable management methods are generally in the minority in any given region, they are unlikely to be given equal representation—or even any representation—in local working groups or statewide stakeholder committees. As a result, the priority-setting process can disadvantage applications for truly innovative and sustainable practices.²¹¹ According to an analysis of USDA data conducted by the Environmental

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Working Group (EWG), only 14% of EQIP funding went to conservation practices that USDA has identified as producing the most environmental benefits for water quality, water quantity, soil health, air quality, and fish and wildlife.²¹² Congress or NRCS should address this disparity by requiring greater representation of sustainable farming approaches on working groups and prioritizing practices demonstrated to have the greatest benefits.²¹³

Environmentalists and small-scale farming advocates have also criticized NRCS for subsidizing large-scale, environmentally harmful operations through EQIP.²¹⁴ Since the program’s inception in 1997, more than $1.6 billion has gone to support irrigation systems through EQIP, making them the most well-funded set of practices financed by the program.²¹⁵ Instead of conserving water, however, efficient irrigation systems often lead to land conversion and increased water usage as farmers use their savings to expand irrigated crop production, switch to more water-intensive crops, or both.²¹⁶ NRCS should prioritize making existing irrigation systems more efficient and ensure that the agency does not fund projects likely to lead to land conversion or increased water usage.

Similarly, waste storage facilities for concentrated animal facilities received a larger share of payments than any other single practice supported by the program; a survey of EQIP funding from 1997 to 2007 showed that these accounted for almost 15% of all EQIP payments.²¹⁷ NRCS’ support for large-scale AFOs has continued since then: in FY 2016, about 12% of total EQIP funding—more than $110 million—went to such facilities.²¹⁸ While some waste management systems, such as anaerobic digesters, can reduce

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emissions in feedlots using liquid manure management systems, sustainable agriculture and environmental justice groups have been highly critical of government efforts to finance them. Even if digesters reduce feedlot emissions, they argue, CAFOs are still bad for the environment, animal welfare, and rural communities. The National Sustainable Agriculture Coalition, for example, has come out against USDA’s policy of supporting new or expanding CAFOs through EQIP, arguing that USDA is subsidizing fundamentally unsustainable practices by doing so.²¹⁹ This funding effectively subsidizes a carbon-intensive form of animal production and may be a factor in the continuing consolidation of the industry noted earlier.²²⁰ A possible alternative, as noted above, are pasture-based or integrated crop-livestock systems, which have much lower rates of methane production.

With capital costs often exceeding $1 million, anaerobic digesters are beyond the price range of what most dairy or hog farmers in the United States can afford. According to EPA, digestion systems are generally not economically viable for operations with fewer than 500 cows, even with current cost-sharing programs.²²¹ This significantly limits their use—more than 90% of dairy farms in the United States have fewer than 500 cows, accounting for 40% of all dairy cows in the country.²²² Of these, many do not use liquid manure systems.

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Rather than supporting environmentally harmful and carbon-intensive practices and production, Congress and USDA should instead redirect EQIP funds to support farms and ranches working to significantly reduce emissions or sequester carbon. Congress should lower the EQIP payment cap for all operations or, at a minimum, it should create a lower cap—or disallow any payments—for AFOs, as several rural, environmental, and family organizations have demanded.²²⁴

And while Congress should eliminate payments to environmentally harmful operations through legislative action, the agency can—and should— eliminate or reduce these payments before Congress acts. The agency itself has the ability to redirect funding to more climate-friendly practices. NRCS has significant leeway in determining which practices are prioritized and can set aside considerable funding for carbon-farming practices.²²⁵ The agency’s Organic Initiative provides an instructive example for how this might be accomplished. In the early 2000s, many organic producers were concerned that the program’s reliance on local administrators and the high demand for EQIP funding from conventional producers disadvantaged applicants seeking funding for organic practices. In response, Congress included provisions in the 2008 Farm Bill requiring the agency to set aside EQIP funds specifically to assist organic producers or producers transitioning to organic production.²²⁶ Producers applying for funds from the Organic Initiative are eligible for up to $140,000 over five years.²²⁷ Farmers can still apply to the general funding pool for larger amounts, but the resulting Organic Initiative ensures that a pool of money is set aside for organic practices each year.

Given NRCS’ broad authority to determine which practices to support, the agency should create a similar pool to support carbon farming, while also prioritizing applications with the greatest climate benefits. While there is no carbon-farming certification system equivalent to organic certification,

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EQIP covers a number of practices that are long-lasting and sequester significant amounts of carbon, such as alley cropping, tree buffer strips, and silvopasture, and the agency should establish simple guidelines for determining whether an applicant is transitioning to, or practicing, carbon farming. In FY 2018, EQIP paid out $1.4 billion in financial assistance.²²⁸ The majority of EQIP funds should ultimately be used to support carbon farming, but even 10% of the total amount, $140 million, would significantly boost powerful sequestration methods, while advancing EQIP’s statutory priorities.

Congress should also increase the co-share from 75% to 90% for the most effective sequestration practices, such as alley cropping and silvopasture. Socially disadvantaged, limited-resource, beginning, and veteran farmers are already eligible for a 90% cost-share rate.²²⁹ By extending this rate to carbon farmers as well, legislators will not only convey that carbon-farming practices are a public policy priority, but they will also make the implementation of such practices more financially feasible for many farmers.

Conservation Stewardship Program. NRCS also administers CSP, which pays farmers to improve, maintain, or adopt conservation practices on their farms. Unlike EQIP, which is focused on funding individual practices—some of which have dubious environmental benefits—CSP supports comprehensive, whole farm conservation in order to address high-priority sustainability concerns.²³⁰ While CSP has the smallest budget of the three main conservation programs—it will receive about 17% of all conservation funding from the 2018 Farm Bill²³¹—it is the largest USDA conservation program on an acreage basis.²³² It also has the biggest impact on a per dollar basis. According to a 2018 analysis, every dollar spent on CSP results in a return of $3.95 to farmers, rural communities, and the environment.²³³ EQIP and CRP, in contrast, were estimated to have returns of $1.01 and $2.11, respectively.²³⁴

CSP pays farmers annually under a five-year contract with the option to renew for another five years if they agree to adopt additional conservation objectives.²³⁵ NRCS revised CSP in fall 2016 by, among other things, offering farmers 67 new practices that are eligible for funding through the program,

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including “planting for high carbon sequestration rate.”²³⁶ As with EQIP, NRCS has the statutory authority to prioritize low-carbon practices and to create a funding pool within CSP for farmers transitioning to, or practicing, carbon farming.²³⁷ NRCS should follow up on its revisions by doing both as quickly as possible, revising the CSP ranking tools so they prioritize applications that will have the greatest benefit on the climate and the environment. Congress should also expand funding for CSP in upcoming farm bills by raising the average payment rate per acre that is authorized for the program to ensure that higher-level conservation activities can be appropriately rewarded. In particular, climate-beneficial activities like resource-conserving crop rotations should be prioritized and receive a higher, supplemental payment to reflect the high-level environmental benefits of those practices.²³⁸ Congress should also strengthen CSP sustainability standards for participation; increase the importance of environmental benefits in the application process; and create a funding pool for agroforestry and perennial operations.

Coordinating conservation efforts. Despite spending billions of dollars each year on conservation programs, USDA does little to coordinate its conservation efforts or measure, evaluate, and report conservation outcomes. The 2018 Farm Bill requires USDA to coordinate procedures and processes for EQIP and CSP, such as applications, contracting, and conservation planning.²³⁹ This will make it easier for farmers to move from EQIP to CSP. Congress should build on this step by requiring USDA to create an automatic graduation process from EQIP to CSP when eligibility requirements have been satisfied. This would increase the number of farmers “graduating” to CSP, which is a more effective conservation program than EQIP, and is a better tool for encouraging carbon-farming practices.

The federal government will need to direct funding to the most effective climate-friendly practices available—increased funding alone will not be sufficient to achieve net-zero emissions. In order to do this, however, USDA must closely monitor and evaluate its conservation programs and provide policymakers and the public with research on their effectiveness. The Healthy Fields and Farm Economies Act, a marker bill introduced in the

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lead-up to the 2018 Farm Bill, included a number of policy changes designed to improve the ability of USDA, policymakers, and the public to evaluate conservation programs. The bill would have created a national technical committee to assist NRCS in monitoring and evaluating conservation programs, directed USDA to evaluate and quantify the environmental benefits of conservation practices, and required the department to submit a public report to Congress assessing each conservation program.²⁴⁰ While these provisions were not included in the 2018 Farm Bill as sustainable agriculture advocates had hoped, they nonetheless lay the groundwork for future steps. Congress should pass legislation that will accomplish the goals set out in the Healthy Fields and Farm Economies Act, with additional provisions that provide funding for qualitative research aimed at improving farmer adoption, implementation, and retention of climate-friendly practices.