Regional economic impacts of policies to control erosion and sedimentation in Illinois and other Corn Belt States


Osteen, Seitz, W.D.

American Journal of Agricultural Economics 60(3): 510-517

1978


This analysis indicates that the adoption of different soil erosion control policies by different states in the Corn Belt will not result in significant shifts of production activities among the states. Some price impacts would occur but they would be felt throughout the region. More significant impacts may occur at the substate level. Farm operators on more erosive lands may be adversely affected. These results were generated using a general equilibriumlinear programming model of crop production and markets in the Corn Belt.

Regional
Economic
Impacts
of
Policies
To
Control
Erosion
and
Sedimentation
in
Illinois
and
Other
Corn
Belt
States
Craig
Osteen
and
Wesley
D.
Seitz
This
analysis
indicates
that
the
adoption
of
different
soil
erosion
control
policies
by
different
states
in
the
Corn
Belt
will
not
result
in
significant
shifts
of
production
activities
among
the
states.
Some
price
impacts
would
occur
but
they
would
be
felt
throughout
the
region.
More
significant
impacts
may
occur
at
the
substate
level.
Farm
operators
on
more
erosive
lands
may
be
adversely
affected.
These
results
were
generated
using
a
general
equilibrium
linear
programming
model
of
crop
production
and
markets
in
the
Corn
Belt.
Key
words:
Corn
belt,
crop
production,
economic
analysis,
erosion,
linear
programming,
P.L.
92-500.
The
Federal
Water
Pollution
Control
Act
Amendments
of
1972,
P.L.
92-500,
determined
a
nationwide
goal
of
eliminating
the
discharge
of
pollutants
into
the
nation's
water
by
1985.
An
interim
water
quality
goal
of
"fishable,
swimmable
waters
nationwide"
by
1
July
1983,
was
also
established.
Under
this
law,
each
state
was
required
to
establish
a
"con-
tinuing
planning
process"
for
water
quality
management
in
order
to
achieve
the
stated
goals.
An
important
nonpoint
pollution
prob-
lem
in
Illinois
and
other
Corn
Belt
states
is
erosion
from
agricultural
lands
and
the
asso-
ciated
sediment
with
its
impacts
on
water
qual-
ity.
The
purpose
of
this
paper
is
to
present
esti-
mates
of
the
spatial
economic
impacts
of
some
alternative
policies
to
control
erosion
and
sedimentation.
Individual
states
and
areas
within
states
are
preparing
separate
plans
under
P.L.
92-500
so
that
there
can
be
varia-
tions
in
degree
of
control
of
erosion
and
sedimentation
between
these
states
and
areas.
It
is
important
to
see
what
spatial
economic
Craig
Osteen
is
a
research
associate
with
the
Institute
for
Envi-
ronmental
Studies,
and
Wesley
D.
Seitz
is
an
associate
professor
of
agricultural
economics
and
associate
director
of
the
Institute
for
Environmental
Studies,
University
of
Illi
nois.
Research
was
supported
by
the
Illinois
Institute
for
Environ-
mental
Quality,
Contract
No.
20.079
and
the
U.
S.
Environmental
Protection
Agency,
Contract
No.
68-01-3584.
The
authors
grate-
fully
acknowledge
the
contribution
of
others
on
the
research
team,
especially
C.
R.
Taylor,
assistant
professor
of
agricultural
eco-
nomics,
Texas
A&M
University.
impacts
may
occur
if
spatial
variations
in
ero-
sion
controls
exist.
Policies
investigated
in-
clude
restrictions
on
per
acre
soil
loss
which
were
applied:
(a)
only
in
Illinois,
(b)
uniformly
in
areas
in
the
Corn
Belt
but
outside
of
Illinois,
and
(c)
uniformly
in
all
Corn
Belt
states.
The
policies
were
aimed
specifically
at
soil
erosion
control,
because
the
relationships
between
erosion
control
policies
and
water
quality
have
not
been
well
defined
at
the
current
time.
Previous
Research
The
majority
of
work
concerning
the
eco-
nomic
impact
of
soil
erosion
controls
on
a
national
or
large
subnational
basis
has
taken
place
at
the
Center
for
Agricultural
and
Rural
Development
(CARD)
at
Iowa
State
Univer-
sity
and
the
Department
of
Agricultural
Eco-
nomics
at
the
University
of
Illinois.
A
number
of
projects
undertaken
by
CARD
have
considered
the
impacts
of
soil
erosion
controls.
Wade
and
Heady
attempted
to
link
demand
for
agricultural
commodities
in
the
United
States
to
sediment
generated
on
crop-
land.
A
cost
-minimizing
linear
programming
model
which
accounted
for
spatial
variation
in
commodity
requirements,
transportation
costs,
soil
loss,
and
sediment
delivery
and
transport
was
used.
One
of
the
model
runs
limited
per
acre
soil
losses
on
different
land
Osteen
and
Seitz
Impacts
of
Erosion
and
Sedimentation
511
classes
to
soil
loss
tolerance
levels.
This
re-
striction
produced
a
large
reduction,
as
com-
pared
to
a
benchmark
run,
in
sediment
load
in
the
erosive
areas
of
the
southeastern
and
midwestern
United
States.
Increased
use
of
reduced
tillage
methods
and
terracing
oc-
curred.
To
reduce
soil
loss,
costs
were
borne
by
producers.
Nagadevara,
Heady,
and
Nicol
used
a
simi-
lar
model
that
did
not
account
for
sediment
delivery
and
transport
to
examine
the
impact
of
applying
soil
loss
restrictions
in
Iowa,
while
leaving
the
rest
of
the
United
States
unregu-
lated.
The
application
of
soil
loss
restrictions
resulted
in
the
removal
of
land
in
Iowa
from
crop
production,
less
intensive
production
on
more
erosive
soils,
and
increased
soil
erosion
control
practices.
Soil
loss
in
Iowa
decreased
while
there
was
a
greater
increase
in
soil
loss
outside
of
Iowa.
Farm
income
in
Iowa
de-
creased
and
production
costs
increased
while
land
values
and
farm
income
increased
outside
Iowa.
Taylor
and
Frohberg
(1977)
used
a
linear
programming
model
of
the
Corn
Belt,
with
demand
functions
for
corn
and
soybeans,
to
determine
the
economic
impacts
of
erosion
controls.
The
model
accounted
for
variations
in
prices
and
production
but
did
not
account
for
transportation
costs
or
sediment
delivery
or
transport.
They
concluded
that
soil
loss
taxes
were
more
effective
in
terms
of
social
cost
than
terracing
subsidies
in
reducing
soil
loss.
With
per
acre
restrictions,
landowners
gained
while
consumers
lost;
the
opposite
oc-
curred
with
a
soil
loss
tax.
Detailed
results
are
available
in
a
forthcoming
EPA
report
(Seitz
et
al.).
Method
A
linear
programming
model
of
the
Corn
Belt
economy
was
used
to
investigate
the
policies
examined
in
the
present
study.
The
model
used
was
a
modification
of
the
construct
de-
signed
by
Taylor
to
investigate
policies
to
con-
trol
nonpoint
sources
of
pollution
in
the
Corn
Belt
(Taylor
and
Frohberg).
The
model
was
applied
to
seventeen
Land
Resource
Areas
(LRAs)
which
produce
approximately
70%
of
U.S.
corn
production
and
60%
of
U.S.
soy-
bean
production
(Swanson
and
Taylor).
The
model
was
modified
by
separating
the
state
of
Illinois
from
other
areas
of
the
Corn
Belt,
in-
corporating
a
new
method
of
including
de-
mand
functions,
and
updating
soil
loss
co-
efficients.
Part
of
this
study
parallels
some
of
the
work
done
by
Nagadevara,
Heady,
and
Nicol,
by
applying
soil
loss
restrictions
in
some
areas
while
leaving
other
areas
unregulated.
The
model
used
in
this
study,
however,
was
somewhat
different
since
it
accounted
for
variable
prices
and
production.
This
feature
helped
reflect
the
impacts
of
policies
on
eco-
nomic
incentives
which,
in
turn,
may
change
prices.
The
impacts
on
producers
and
con-
sumers
could
be
more
readily
identified
than
with
a
cost
-minimizing
or
constant
price
model.
Structure
of
the
Model
The
objective
function
in
the
model
was
pro-
ducers'
plus
consumers'
surpluses
from
the
production
of
corn
and
soybeans
minus
the
costs
of
production
to
meet
requirements
for
wheat,
oats,
and
hay.
This
function
was
maximized
subject
to
the
restrictions
of
the
land
base
and
environmental
controls.
The
model
was
composed
of
two
interdependent
components
which
operated
simultaneously:
(a)
a
component
that
determines
requirements
for
corn
and
soybeans,
and
(b)
a
component
that
minimizes
the
costs
of
producing
corn,
soybeans,
wheat,
oats,
and
hay
to
meet
re-
quirements
on
a
fi
xed
land
base.
The
component
which
determined
require-
ments
for
corn
and
soybeans
was
defined
by
li
near
demand
functions
for
corn
and
soy-
beans.
These
demand
functions
were
specified
by
Taylor
and
Frohberg
after
review
of
a
number
of
studies.
The
same
demand
func-
tions
were
included
in
the
model
using
a
method
described
by
Duloy
and
Norton.
The
method
is
conceptually
equivalent
but
compu-
tationally
more
efficient
than
that
used
by
Taylor
and
Frohberg.
Requirements
for
wheat,
oats,
and
hay
were
determined
outside
of
the
model.
(The
addi-
tional
costs
of
estimating
demand
functions
for
these
crops
and
the
additional
computational
costs
in
running
the
model
were
felt
to
be
unjustified
for
this
study.)
Hay
requirements
were
set
for
each
LRA,
while
the
require-
ments
for
wheat
and
oats
were
established
for
the
Corn
Belt.
With
the
application
of
soil
loss
constraints,
land
was
removed
from
produc-
tion.
It
was
assumed
that
land
removed
from
row
crop
production
due
to
the
soil
loss
con-
512
August
1978
Amer.
J.
Agr.
Econ.
straints
would
be
allocated
to
hay
production
thus
producing
revenue
for
the
landowner.
Each
production
activity
in
the
cost
-
minimizing
component
was
a
crop
rotation
combined
with
a
tillage
practice
and
a
conser-
vation
practice
and
was
applied
to
a
land
capability
unit
(LCU)
in
a
land
resource
area
(LRA).
Tillage
practices
included
fall
moldboard
plowing,
spring
moldboard
plow-
ing,
and
chisel
plowing.
Conservation
prac-
tices
included
straight
-row
plowing,
contour-
ing,
and
terracing.
Terracing
was
limited
to
those
LCUs
on
which
it
was
an
appropriate
technique.
Insect
problems
associated
with
conservation
tillage,
specifically
the
spread
of
cutworm
were
not
accounted
for.
As
a
result,
costs
for
conservation
tillage
may
be
under-
stated.
However,
these
costs
were
not
consid-
ered
to
be
a
major
obstacle
to
the
use
of
con-
servation
tillage
(Moore).
The
state
of
Illinois
was
defined
by
calculat-
ing
the
acreage
of
each
LCU
in
an
LRA
within
the
state
(Soil
and
Water
Conservation
Needs
Committee
of
Illinois
1970).
Each
LRA
was
divided
into
areas
inside
and
outside
of
Il-
linois.
Because
the
Illinois
portions
of
LRAs
95
and
105
were
quite
small,
they
were
aggre-
gated
with
LRA
108
in
order
to
lower
compu-
tation
costs.
Some
of
the
relatively
minor
LRAs
outside
of
Illinois
were
also
aggregated
to
reduce
computation
costs.
The
total
num-
ber
of
production
regions
was
nineteen.
Soil
loss
coefficients
used
in
this
study
were
updated
from
those
used
in
Taylor
and
Frohberg's
study.
The
Soil
Conservation
Ser-
vice
has
changed
the
inputs
to
the
Universal
Soil
Loss
Equation
in
recent
years.
Some
of
the
assumptions
concerning
slope
and
slope
length
in
LCUs
and
LRAs
were
changed
in
this
study.
Inputs
for
the
Universal
Soil
Loss
Equation
were
obtained
from
Lee
and
Kuder.
Results
and
Analysis
This
section
will
discuss
the
estimates
of
im-
pacts
on
soil
loss
and
economic
impacts
on
Illinois
and
Corn
Belt
farmers
brought
about
by
policies
to
control
soil
loss.
The
benchmark
solution
estimated
what
would
occur
under
market
conditions
with
no
environmental
con-
trol
policies.
Other
runs
of
the
model
include:
a
soil
loss
restriction
of
3
tons
per
acre
per
year
(TAY)
applied
only
in
Illinois
(policy
I),
a
3
TAY
restriction
applied
in
all
Corn
Belt
states
except
Illinois
(policy
NI),
and
a
3
TAY
restriction
applied
in
the
entire
Corn
Belt
(pol-
icy
CB).
Definition
of
Terms
Used
and
Assumptions
Required
in
Analysis
Economic
terms
discussed
are
now
defined:
social
cost
is
—1(APS
+
ACS);
APS
is
change
in
producers'
surplus
relative
to
the
bench-
mark:
5
RQiii
X
PRI
CR/)
1=1
(QB1
XPBi
C
Bin
;
and
ACS
is
change
in
consumers'
surplus
relative
to
the
benchmark:
L
UARi
QRi
PRi)
(ABi
QRiPRi)
1=1
5
I
(Qin
P
Bi
QRi
P
Rd•
The
following
definitions
relate
to
commodity
is
A
B
,
is
area
under
demand
curve
for
bench-
mark
run;
AR,
is
area
under
demand
curve
for
soil
loss
restriction;
Pm,
price
with
benchmark
run;
PRi,
price
with
soil
loss
restriction;
Q13i,
quantity
produced
with
benchmark
run;
Q811
quantity
produced
with
soil
loss
restriction;
and
i,
commodity;
i
=
1
for
corn,
i
=
2
for
soybeans,
i
=
3
for
wheat,
i
=
4
for
oats,
and
i
=
5
for
hay.
The
prices
of
corn
and
soybeans
were
de-
termined
by
the
objective
function.
The
prices
of
wheat,
oats,
and
hay
were
imputed.
In
order
to
add
producers'
and
consumers'
surpluses
and
to
make
comparisons
of
social
cost
between
runs,
it
was
assumed
that
a
dol-
lar
has
the
same
value
to
all
individuals.
Social
cost
does
not
account
for
the
environmental
benefits
and
administrative
costs
brought
about
by
a
policy.
The
Benchmark
Under
the
benchmark
solution,
producers'
surplus
was
$8.116
billion
while
consumers'
surplus
was
$11.001
billion.
The
correspon-
dence
between
actual
and
benchmark
crop
acreages
by
LRA
was
similar
in
degree
to.
the
Taylor
and
Frohberg
results;
but
there
were
some
differences,
and
these
differences
par-
tially
explain
the
differences
between
their
re-
sults
and
ours.
The
model
predicted
that
no
land
would
be
Osteen
and
Seitz
Impacts
of
Erosion
and
Sedimentation
513
terraced
or
contoured.
These
conservation
practices increase
the
per
acre
cost
of
produc-
tion
without
changing
current
yields.
Future
costs
and
benefits
of
conservation
practices
were
not
considered.
Approximately
74%
of
the
land
in
cultivation
was
under
conservation
tillage
(chisel
plowing).
Reduced
labor
input
lowered
the
per
acre
costs
of
production
of
conservation
tillage
relative
to
conventional
tillage.
The
average
soil
loss
on
cropland
planted
in
Illinois
was
estimated
to
be
2.97
tons
per
acre
per
year
(TAY).
Other
estimates
of
the
current
condition
of
land
use
and
soil
loss
are
somewhat
different.
It
has
been
estimated
that
the
average
soil
loss
on
Illinois
cropland
under
current
conditions
is
5.1
TAY
(Kuder).
It
also
has
been
estimated
that
there
are
less
than
250,000
acres
of
ter-
raced
land
in
Illinois
while
there
are
approxi-
mately
1.3
million
acres
of
contoured
land
in
Illinois
(Ives).
Approximately
28%
of
Illinois
cropland
was
chisel
plowed
in
1976
(Lessitor).
The
large
acreage
in
conservation
tillage
in
the
benchmark
as
compared
to
the
current
situa-
tion
accounts
for
low
estimate
of
soil
loss.
The
model
implies
that
there
may
be
a
sub-
stantial
increase
in
conservation
tillage
in
Il-
linois
and
throughout
the
Corn
Belt
due
to
lower
labor
costs.
This
increase
in
conserva-
tion
tillage
may
bring
about
a
large
decrease
in
soil
loss
from
the
current
condition
without
soil
erosion
control
by
government.
Soil
Erosion
Policies
Economic
impacts
in
the
Corn
Belt.
The
re-
sults
of
applying
soil
loss
restrictions
to
the
model
show
that
society
will
bear
a
cost
to
control
soil
erosion
with
all
policies.
Produc-
ers
and
consumers
do
not
share
the
cost
equally
and
the
incidence
of
the
cost
changes
with
the
area
of
application
of
the
soil
loss
restriction.
With
policy
I,
producers'
surplus
increased
and
consumers'
surplus
decreased,
while
the
opposite
occurred
with
policy
NI
and
CB.
These
results
are
shown
in
table
1.
Social
cost
increased
as
the
area
of
applica-
tion
increased
from
Illinois
to
areas
outside
Illinois
to
the
entire
Corn
Belt.
Social
cost
increased
from
$15
million
for
policy
Ito
$48
million
with
Policy
NI
to
$64
million
with
pol-
icy
CB.
Producers'
surplus
increased
by
$36.4
mil-
lion
with
policy
I,
decreased
by
$339
million
with
policy
NI
and
by
$322
million
with
policy
CB
as
compared
to
the
benchmark.
Consum-
ers'
surplus
decreased
by
$49.6
million
with
policy
I,
increased
by
$29.1
million
with
policy
NI,
and
by
$258
million
with
policy
CB.
With
policies
NI
and
CB,
consumers'
surplus
increased
while
producers'
surplus
decreased.
These
results
conflict
with
Taylor
and
Frohberg's
fi
ndings
that
producers'
surplus
increased
while
consumers'
surplus
decreased
when
a
soil
loss
restriction
was
Table
1.
Changes
in
Economic
Variables
Due
to
Soil
Erosion
Policies
Changes
from
Benchmark
Due
to
3
TAY
Soil
Loss
Restriction
Item
Benchmark
Policy
I
Policy
NI
Policy
CB
Social
cost
(million
$)
0
15.0
48.0
64.0
Consumers'
surplus
(million
$)
0
-49.6
291.0
258.0
Producers'
surplus
(million
$)
0
36.4
-339.0
-322.0
Production
cost
(million
$)
0
6.0
2.0
26.5
Gross
revenue
(million
$)
0
36.3
-337.0
-295.0
Commodity
prices
Corn
2.57
2.58
2.52
2.48
Soybeans
5.45
5.45
5.76
5.87
Wheat
4.84
4.84
4.21
4.46
Oats
2.38
2.38
2.04
2.07
Hay
56.17
56.31
53.64
54.18
Commodity
production
(in
billion
bu.)
Corn
3.662
3.653
3.700
3.754
Soybeans
0.760
0.759
0.719
0.705
Wheat
0.227
0.227
0.227
0.227
Oats
0.372
0.372
0.372
0.372
Hay
(million
tons)
25.937
26.132
27.269
27.464
514
August
1978
applied
in
the
Corn
Belt.
The
reason
for
these
differences
will
be
discussed
in
the
section
on
prices
and
production.
Prices
and
production.
Soil
loss
restrictions
required
that
erosion
control
practices
be
used
with
some
crop
rotations
on
some
LCUs.
These
erosion
controls
increased
the
costs
of
producing
crops.
These
cost
changes
had
im-
pacts
on
crop
prices,
production,
and
acreages.
Since
crops
had
varying
erosion
rates,
soil
loss
restrictions
had
different
im-
pacts
on
the
prices
of
each
crop.
Thus
the
relative
returns
of
crops
changed
and
farmers
changed
their
production
mixes
in
such
a
way
as
to
maximize
income
under
the
constraint.
Table
1
illustrates
commodity
prices
and
commodity
production
for
each
policy.
Soy-
bean
production
decreased
and
price
in-
creased
as
the
area
of
the
restriction
increased
from
policy
Ito
policy
NI
to
policy
CB.
Corn
price
decreased
and
production
increased.
The
prices
of
wheat,
oats,
and
hay
generally
decreased
when
soil
loss
restrictions
were
applied
but
a
pattern
of
price
changes
was
not
readily
apparent.
Since
soybean
production
generates
higher
soil
erosion
rates
than
other
crops,
the
cost
of
meeting
the
restriction
was
higher
with
soy-
bean
production
than
for
other
crops,
thus
soybean
production
decreased.
Decreasing
soybean
production
opens
land
for
the
produc-
tion
of
the
other
crops.
Prices
of
wheat,
oats,
and
hay
decreased
due
to
shifts
to
more
fertile
land.
Corn
also
was
allocated
to
this
land
in
policies
NI
and
CB
when
corn
production
in-
creases.
The
changes
in
prices
and
production
im-
pact
producers'
and
consumers'
surpluses.
The
decrease
in
consumers'
surplus
with
pol-
icy
I
was
the
result
of
the
small
increases
of
corn
and
hay
prices
while
other
prices
re-
mained
constant.
The
increase
of
corn
and
hay
prices
in
the
price
-inelastic
portions
of
de-
mand
curves
increased
producers'
surplus.
The
decrease
in
all
prices
except
soybeans
relative
to
the
benchmark
in
policies
NI
and
CB
resulted
in
an
increase
in
consumers'
surplus.
Soybean
price
increased
in
the
price
-
elastic
portion
of
its
demand
curve
while
the
prices
of
other
crops
decreased
in
price
-
inelastic
areas
causing
gross
revenue
to
de-
crease.
The
decrease
in
revenue
and
the
in-
crease
in
erosion
control
costs
caused
produc-
ers'
surplus
to
decrease
in
policies
NI
and
CB.
The
changes
in
producers'
and
consumers'
Amer.
J.
Agr.
Econ.
surpluses
resulting
from
a
3
TAY
soil
loss
restriction
throughout
the
Corn
Belt
differ
in
this
model
and
Taylor
and
Frohberg's.
This
occurs
because
soybean
price
increases
and
corn
price
decreases
relative
to
the
benchmark
in
this
work
while
both
increase
in
Taylor
and
Frohberg's
work.
The
different
method
of
in-
cluding
demand
curves
in
this
model
may
have
had
some
impact.
The
two
methods
might
not
be
exactly
equivalent
computationally.
Also,
in
converting
to
the
new
method,
some
eco-
nomic
incentives
may
have
been
changed
through
computations
made
in
the
process.
In
this
model
also,
more
soybeans
and
less
corn
were
allocated
to
erodable
areas
in
the
bench-
mark
solution.
As
a
result,
more
soybeans
were
removed
from
production,
while
corn
production
increased.
Aggregation
of
LRAs
that
generated
slightly
different
costs
and
yields
appears
to
have
caused
the
difference
in
crop
allocations.
Regional
economic
impacts.
The
results
show
that
there
will
be
very
little
impact
on
Illinois'
comparative
economic
advantage
in
crop
pro-
duction
if
Illinois
is
the
only
state
to
restrict
soil
loss,
if
it
is
the
only
state
not
to
restrict
soil
loss,
or
if
it
cooperates
with
all
other
states
in
restricting
soil
loss.
The
impact
of
the
policies
on
Illinois'
share
of
producers'
surplus
includes
the
impacts
of
price
changes,
erosion
control
costs,
and
shifts
of
production
between
regions.
Price
changes
which
were
brought
about
by
soil
loss
restrictions
had
the
same
impact
on
per
acre
returns
for
a
crop
in
unrestricted
areas
as
in
restricted
areas
causing
producers'
surplus
to
change
in
the
same
direction
in
both
areas.
Erosion
control
costs,
however,
tended
to
cause
producers'
surplus
in
restricted
and
un-
restricted
areas
to
change
in
opposite
direc-
tions
due
to
erosion
control
costs
and
produc-
tion
changes
required
in
restricted
areas
only.
Erosion
control
costs
changed
economic
in-
centives
for
crops
in
different
regions
causing
production
shifts.
Production
shifts
tended
to
moderate
decreases
in
producers'
surplus
in
Illinois.
The
small
impact
on
Illinois'
comparative
advantage
is
demonstrated
by
the
small
change
in
Illinois'
share
of
producers'
surplus
for
all
policies
as
compared
to
the
benchmark.
Illinois
had
a
producers'
surplus
of
$1.996
bil-
lion,
which
is
24.6%
of
producers'
surplus
for
the
Corn
Belt.
Producers'
surplus
in
Illinois
decreased
by
$47
(to
23.9%)
million
with
pol-
Osteen
and
Seitz
Impacts
of
Erosion
and
Sedimentation
515
icy
I,
by
$113
(to
24.2%)
million
with
policy
NI,
and
by
$133
(to
24%)
million
with
policy
CB.
The
maximum
decrease
in
Illinois'
share
of
producers'
surplus
is
0.7%.
The
results
of
policy
I
are
consistent
with
the
fi
ndings
of
Nagadevara,
Heady,
and
Nicol;
that
is,
income
in
the
unregulated
area
increased
while
it
decreased
in
the
regulated
area.
With
policy
NI,
however,
income
de-
creased
in
both
the
regulated
and
unregulated
areas.
This
result
occurred
because
price
and
production
changes
were
brought
about
by
application
of
the
soil
loss
restriction.
Total
corn
production
and
Illinois'
share
of
corn
production
decreased
slightly
relative
to
the
benchmark
from
policy
Ito
policy
NI
to
policy
CB.
Illinois'
share
of
soybean
production
in-
creased
from
approximately
15%
for
the
bench-
mark
and
policy
I
to
16%
for
policies
NI
and
CB.
This
shift
from
corn
to
soybeans
in
Illinois
under
policies
NI
and
CB,
while
the
opposite
occurs
outside,
generated
the
slight
income
shifts.
Producers'
surplus
decreased
only
slightly
in
Illinois
with
policy
I
because
the
prices
of
corn
and
hay
increased
while
Illinois
main-
tained
a
high
share
of
corn
production.
These
price
increases
tended
to
offset
decreases
in
revenue
caused
by
decreasing
production
of
corn,
soybeans,
wheat,
and
oats.
The
primary
reason
for
the
larger
decrease
in
producers'
surplus
in
Illinois
with
policies
NI
and
CB
than
with
policy
I
was
the
decrease
in
the
prices
of
corn,
wheat,
oats,
and
hay.
The
shift
of
soybeans
into
and
corn
out
of
Illinois
under
policies
NI
and
CB
was
the
re-
sult
of
farmers
outside
of
Illinois
substituting
corn
for
soybeans
to
reduce
erosion
control
costs.
As
a
result,
corn
price
decreased
and
soybean
price
increased.
These
price
changes
encouraged
Illinois
farmers
to
substitute
soy-
beans
for
corn.
Under
policy
NI,
there
was
no
soil
loss
restriction
in
Illinois
to
limit
the
plant-
ing
of
soybeans.
There
was
a
restriction
under
policy
CB
which
resulted
in
less
Illinois
soy-
bean
production
than
under
policy
NI.
How-
ever,
the
fl
at
land
of
Illinois
has
lower
erosion
rates
than
some
other
areas
of
the
Corn
Belt
resulting
in
lower
erosion
control
costs
in
Il-
linois.
These
lower
costs
encouraged
the
crop
shift.
It
appears
that
these
crop
shifts,
though
small,
moderated
the
decrease
of
producers'
surplus
under
policies
NI
and
CB.
Economic
impacts
within
Illinois.
The
eco-
nomic
impacts
on
Illinois
of
these
three
poli-
cies
were
not
evenly
distributed
within
the
state.
The
most
severe
income
reductions
oc-
curred
on
lands
with
high
slopes
and
more
erodable
soils,
more
prevalent
in
southern
Il-
linois,
in
general,
than
other
areas
of
the
state.
These
areas
required
more
expensive
erosion
control
practices
and
changes
in
crop
rotations
to
meet
the
soil
loss
restriction
than
fl
atter
land
and
less
erodable
soil.
These
changes
had
impacts
on
prices
which,
in
turn,
affect
returns
per
acre
on
land
not
needing
erosion
control
practices.
Under
policy
I,
average
change
in
returns
per
acre
varied
from
a
gain
of
$0.47
per
acre
in
LRA
110
to
a
reduction
of
$2.36
in
LRA
113.
The
small
gains
were
the
result
of
small
in-
creases
in
the
prices
of
corn
and
soybeans.
With
policy
NI,
average
per
acre
change
in
returns
varies
from
a
reduction
of
$3.71
per
acre
in
LRA
115
to
a
loss
of
$6.02
in
LRA
113.
With
policy
CB,
average
per
acre
change
var-
ies
from
a
loss
of
$4.30
in
LRA
114
to
a
loss
of
$10.71
in
LRA
113.
With
policies
NI
and
CB,
the
prices
of
all
commodities
except
soybeans
decreased.
These
price
decreases
resulted
in
losses
to
all
land
in
Illinois.
Income
gains
and
reductions
were
not
evenly
distributed
among
land
classes.
The
largest
reduction
in
returns
per
acre
occurred
on
LCUs
2E,
3E,
and
4E,
that
is
land
with
an
erosion
problem
and
relatively
high
slope,
under
policies
I
and
CB,
but not
under
policy
NI.
Under
policies
I
and
CB,
changes
in
crop
rotations
and
applications
of
erosion
controls
were
needed
to
meet
the
soil
loss
restriction.
The
greatest
changes
in
land
management
and
the
largest
reductions
in
returns
per
acre
occurred
on
LCUs
3E,
4E,
and
58,
which
aggregated
SCS
soil
classes
5
through
8,
in
LRA
113
in
southern
Illinois.
Soils
in
LRA
113
are
more
erodable
than
soils
in
other
areas
of
Illinois.
As
a
result,
economic
impacts
were
greater
in
LRA
113
than
in
other
LRAs.
The
importance
of
price
impacts
on
per
acre
returns
can
be
appreciated
by
comparing
the
policies.
Per
acre
losses
in
policies
NI
and
CB
were,
in
general,
considerably
larger
than
in
policy
I.
The
differences
in
per
acre
losses
between
policies
NI
and
I
on
W
subclass
soils
in
particular
showed
that
price
impacts
alone
can
cause
very
large
changes
in
per
acre
re-
turns.
Soil
erosion
control
practices
were
not
applied
to
these
soils
due
to
extremely
low
soil
losses.
With
policy
I,
all
W
subclass
soils
showed
increases
in
per
acre
returns
due
to
516
August
1978
Amer.
J.
Agr.
Econ.
increases
in
the
price
of
corn
but
with
policies
NI
and
CB,
the
per
acre
returns
on
these
soils
decreased
due
to
decreases
in
all
crop
prices
except
soybean
price.
Soil
loss
and
conservation
practices.
Soil
loss
restrictions
have
impacts
on
land
management
practices
and
soil
loss
from
land.
Soil
loss
decreased
in
the
restricted
area
and
increased
in
the
unrestricted
area,
however,
the
de-
crease
in
soil
loss
in
the
restricted
area
was
greater
than
the
increase
in
the
unrestricted
area.
These
results
are
different
than
those
reported
by
Nagadevara,
Heady,
and
Nicol,
which
showed
that
soil
loss
increased
more
outside
Iowa
than
it
decreased
in
Iowa.
Soil
loss
in
Illinois
decreased
by
approxi-
mately
33
million
tons
relative
to
the
bench-
mark
with
policies
I
and
CB.
Soil
loss
out-
side
Illinois
increased
by
66,000
tons
relative
to
the
benchmark
with
policy
I,
decreased
by
359
million
tons
with
policy
NI,
and
by
352
million
tons
with
policy
CB.
Soil
loss
outside
Illinois
was
7.4
million
tons
greater
with
policy
CB
than
with
policy
NI.
Total
soil
loss
in
the
Corn
Belt
decreased
by
32.7
million
tons
with
policy
I,
by
348.6
million
tons
with
policy
NI,
and
by
384.5
million
tons
with
policy
CB.
Applying
soil
loss
restrictions
has
a
very
large
impact
on
conservation
practices.
Over
30%
of
Illinois'
area
and
over
45%
of
the
area
outside
of
Illinois
is
shifted
into
conservation
practices
(terraces
and
contouring)
when
a
3
TAY
restriction
is
applied.
Approximately
1.1
million
acres
of
land
in
Illinois
were
allocated
to
terracing
and
6
million
acres
to
contouring
under
policies
I
and
CB.
The
impact
of
soil
loss
restrictions
on
tillage
practices
relative
to
the
benchmark
is
less
dramatic.
This
is
due
primarily
to
the
high
percentage
of
conservation
tillage
in
all
runs
including
the
benchmark,
which
produces
less
soil
loss
than
fall
and
spring
plowing.
Policy
Implications
There
is
variation
in
the
economic
conse-
quences
of
applying
soil
loss
restrictions
on
areas
of
varying
sizes
as
might
occur
under
P.L.
92-500.
Soil
loss
restrictions
caused
relatively
small
social
costs
ranging
from
$15
million
for
policy
I
to
$64
million
for
policy
CB.
The
price
ef-
fects
and
costs
of
soil
erosion
controls
brought
about
relatively
large
decreases
in
returns
to
landowners
and
decreases
in
expenditures
to
consumers
with
policies
NI
and
CB.
These
results
disagree
with
those
of
Taylor
and
Frohberg,
where
producers'
surplus
increased
and
consumers'
surplus
decreased.
The
dis-
tribution
of
crops
on
erodable
soil
before
a
restriction
is
applied
appears
to
be
important
in
determining
price
impacts.
Under
policy
I,
there
were
relatively
small
increases
in
returns
to
landowners
and
consumer
expenditures.
Taken
together,
these
results
and
Taylor
and
Frohberg's
results
may
imply
that the
eco-
nomic
impacts
on
producers
may
be
quite
small.
The
impact
of
the
three
policies
on
Illinois'
comparative
advantage
in
agricultural
produc-
tion,
that
is,
Illinois'
share
of
producers'
surplus,
was
insignificant.
This
occurred
be-
cause
the
impacts
of
the
policies
on
prices
affected
both
regulated
and
unregulated
areas.
Shifts
of
production
between
regions
seemed
to
have
much
less
impact
on
producers'
surplus
in
a
region
than
changes
in
crop
prices.
The
economic
impacts
of
these
policies
were
unevenly
distributed
in
Illinois.
Under
policies
NI
and
CB,
there
is
a
large
burden
on
a
relatively
small
group
in
Illinois,
the
owners
of
erodable
land.
The
model
predicts
that
there
will
be
a
de-
crease
in
both
corn
and
soybean
production
when
a
soil
loss
restriction
is
applied
only
in
Illinois.
When
a
soil
loss
restriction
is
applied
outside
Illinois
or
in
the
entire
Corn
Belt,
the
model
predicts
that
soybean
production
will
decrease
and
corn
production
increase
in
the
Corn
Belt,
while
soybeans
shift
to
Illinois.
Soil
loss
was
reduced
by
changing
crop
pat-
terns,
tillage
practices,
and
conservation
prac-
tices
with
all
three
policies.
With
policies
I
and
NI,
soil
loss
decreased
in
regulated
areas
but
increased,
to
a
lesser
degree,
in
unregulated
areas.
Coordination
of
the
policies
of
the
dif-
ferent
states
would
minimize
these
transfers
of
soil
loss
between
states.
However,
total
soil
loss
would
still
decrease
if
one
state
enacted
a
soil
erosion
control
policy
while
others
did
not,
and
the
income
impacts
on
agriculture
in
that
state
would
not
be
large.
The
model
predicts
that
economic
incen-
tives
will
encourage
farmers
to
adopt
conser-
vation
tillage
methods
and
reduce
soil
loss.
Government
action
through
fi
nancial
assis-
tance
or
soil
loss
restrictions
would
not
be
needed
to
bring
about
the
decrease
in
soil
loss
associated
with
the
adoption
of
conservation
tillage.
Education
programs
emphasizing
the
Osteen
and
Seitz
Impacts
of
Erosion
and
Sedimentation
517
fi
nancial
advantages
of
conservation
tillage,
as
well
as
the
soil
conservation
aspects,
could
be
instituted
and
continued
to
encourage
the
adoption
of
conservation
tillage.
Conservation
tillage,
however,
may
not
always
meet
SCS
soil
loss
goals.
[Received
November
1977;
revision
accepted
April
1978.]
References
Duloy,
John
H.,
and
Roger
D.
Norton.
"Prices
and
in-
comes
in
Linear
Programming
Models."
Amer.
J.
Agr.
Econ.
57(1975):591-600.
Ives,
Freeland.
Personal
correspondence.
Civil
engineer,
Soil
Conservation
Service,
Champaign,
III.,
1977.
Kuder,
Homer.
Personal
correspondence.
Consultant,
Il-
linois
Environmental
Protection
Agency,
St.
Joseph,
III.,
1977.
Lee,
M.
T.
Unpublished
data
on
gross
soil
loss
in
the
Corn
Belt.
Illinois
State
Water
Survey,
Champaign,
Ill.,
Nov.
1976.
Lessitor,
Frank.
'No
-Till
Still
Increasing."
No
-Till
Farmer,
March,
1976,
pp.
4-5.
Moore,
Steve.
Personal
correspondence.
Extension
en-
tomologist,
Illinois
Natural
History
Survey,
Cham-
paign,
Ill.,
1977.
Nagadevara,
V.
S.,
Earl
0.
Heady,
and
Kenneth
S.
Nicol.
"Implications
of
Application
of
Soil
Conservancy
and
Environmental
Regulations
in
Iowa
within
a
Na-
tional
Framework."
Rep.
No.
57.
Center
for
Agricul-
tural
and
Rural
Development,
Iowa
State
University,
1975.
Seitz,
W.
D.,
D.
M.
Gardner,
S.
K.
Gove,
K.
L.
Gunter-
mann,
J.
R.
Karr,
R.
G.
F.
Spitze,
E.
R.
Swanson,
C.
R.
Taylor,
D.
L.
Uchtmann,
and
J.
C.
van
Es.
"Al-
ternative
Policies
for
Control
of
Nonpoint
Sources
of
Water
Pollution
from
Agriculture.
Institute
for
En-
vironmental
Studies,
University
of
Illinois,
EPA
-600/
5-78-005,
Apr.
1978.
Soil
and
Water
Conservation
Needs
Committee
of
Illinois.
Illinois
Conservation
Needs
Inventory.
Cooperative
Extension
Service,
University
of
Illinois,
1970.
Swanson,
E.
R.,
and
C.
R.
Taylor.
"Potential
Impact
of
Increased
Energy
Costs
on
the
Location
of
Crop
Pro-
duction
in
the
Cornbelt."
Presented
at
the
31st
An-
nual
Meeting
of
the.
Soil
Conservation
Society
of
America,
1-3
Aug.
1976,
Minneapolis,
Minn.
Taylor,
C.
Robert,
and
Klaus
K.
Frohberg.
"The
Welfare
Effects
of
Erosion
Controls,
Banning
Pesticides,
and
Limiting
Fertilizer
Application
in
the
Corn
Belt."
Amer.
J.
Agr.
Econ.
59(1977):25-35.
U.S.
Department
of
Agriculture,
Soil
Conservation
Ser-
vice.
"Land
Resource
Regions
and
Major
Land
Re-
source
Areas
of
the
United
States."
USDA
Hand-
book
296,
Dec.
1965.
Wade,
James
C.,
and
Earl
0.
Heady.
"Controlling
Non
-
point
Sediment
Sources
with
Cropland
Management:
A
National
Economic
Assessment."
Amer.
J.
Agr.
Econ.
59(1977):13-24.