Research

Abstract.  Payments for ecosystem services (PES) programs can enhance resilience to extreme weather events by establishing natural infrastructure.  I investigate the effectiveness of the Conservation Reserve Enhancement Program (CREP) in the United States in mitigating flooded crop losses through the restoration of riparian buffers and wetlands.  By leveraging variation in the timing of the program’s introduction across counties, I find that CREP reduced the number of flooded crop acres by 39 percent and the extent of damage on those acres by 26 percent during the initial 11 years of program implementation.  The flood mitigation benefits of CREP also generated financial spillover effects on the federal crop insurance program, saving $94 million in indemnity payouts that would have otherwise been paid to insured farmers.  Two-thirds of these benefits resulted from reduced flood damage on cropland in production, while the remaining benefits were attributed to the removal of at-risk cropland from production.  The magnitude of benefits varied spatially and temporally depending on the duration of program availability, the extent of program participation, and the adoption of alternative risk management strategies.  Overall, these findings underscore the critical role of PES programs in facilitating nature-based solutions for climate change adaptation.

Abstract.  Emissions trading programs have been promoted as efficient means to reduce water pollution and sequester carbon from agricultural land. While trading programs are often evaluated in isolation, they compete with longstanding agricultural conservation subsidy programs. Both programs target afforestation practices that provide environmental benefits using different payment structures: Trading pays for performance while agricultural conservation programs pay for effort. We evaluate the performance of both programs in isolation and competition using an integrated assessment model that links a stated preference survey of agricultural landowners for establishing forests with biophysical models of water quality and carbon sequestration benefits of forests in the Chesapeake Bay region. Our numerical policy simulation suggests that the water quality trading program in isolation can provide sufficient financial incentives for landowners to engage in afforestation activities on agricultural land. However, federal agricultural conservation subsidies largely crowd out the trading program when in competition. Stacking payments for carbon offsets with water quality trading payments does not enhance trading participation. Overall, the attractiveness and effectiveness of emissions trading programs for afforestation activities on agricultural land are heavily influenced by the presence and generosity of federal agricultural conservation subsidies.