A note on the use of conservation practices in U.S. agriculture.

This article measures the effect of an increase in productivity attributable to an increase in soil organic carbon associated with the increase in the use of conservation practices in agriculture in the United States. Both the direct and indirect effects are calibrated. The analytical approach used consists of a dynamic computable general equilibrium model composed of 14 producing sectors, 10 consuming sectors, seven household categories classified by income, and a government. The results suggest that the impact of a change in productivity is an increase in output over a six year period starting in 1998 in field crops. The most significant impact is felt in the livestock sector. This is because field crops are a major input in the production of livestock. The food processing sector also exhibits a relatively large increase because of the increase in inputs of both field crops and livestock. Manufacturing output increases primarily because overall investment rises and most investment utilizes manufacturing goods. The other producing sectors are generally unaffected by the increase in agricultural production due to an increase in soil organic carbon. Coincident with the increase in the production of field crops is a relatively large decrease in the price of field crops. Other noticeable price reductions occur in the livestock sector and the food processing sector. For the consuming sectors, the consumption of food and alcohol and tobacco increase but consumption in all of the other sectors remains basically unchanged. Prices in the food and alcohol and tobacco sectors decline by about 1% while the prices in the other sectors remain static. Household welfare increases in the aggregate by only 0.1% with this increase occurring uniformly across all household categories. Revenue received by the government increases a modest 2% in response to an increase in output and, hence, an increase in taxes paid. The results indicate that there are significant production benefits for several sectors that can be realized by an increase in the use of conservation practices in agricultural production which, in turn, enhances soil organic carbon. There are a number of policy options available to promote the use of conservation practices. These include education and technical assistance, financial assistance, research and development, land retirement, and regulation and taxes.