"Does Crop Losses Experience Influence Conservation Reserve Program Land Enrollment?" with Mykel Taylor and Sunjae Won

The Conservation Reserve Program (CRP) is a voluntary land retirement program, aiming to improve soil health and enhance environmental quality by providing financial incentives to encourage farmers to retire their eco-sensitive land from agricultural production. However, how farmers’ crop losses experiences influence their CRP enrollment decisions is still uncovered. Based on dynamic FE models, newly developed “IV-free” method and a series of robustness checks, we find increasing crop losses in prior years has a significantly positive influence on CRP acreage in subsequent years, revealing farmers suffering crop losses are more likely to enroll their land in CRP to secure stable income and hedge risks. Our findings indicate the dual role of CRP, not only for environmental sustainability, but is an effective risk management tool for farm operators, underscoring the importance of integrating risk management and conservation policies in policy design.