The Effect of Conservation Priority Areas on Bidding Behavior in the Conservation Reserve Program

Keri Jacobs, Walter N. Thurman and Michelle C. Marra

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: We explore how a landowner’s bid to enroll in the Conservation Reserve Program (CRP) is influenced by his parcel’s designation as a Conservation Priority Area (CPA). A theoretical model of a landowner’s optimal bid is presented, and we demonstrate the ambiguity in a landowner’s optimal bid response to CPA designations. The bid choice is analyzed using a data set of accepted and unaccepted offers during three CRP sign-up periods. We focus empirically on a subset of offers from the Prairie Pothole CPA to identify whether bid responses to exogenous location factors differ across landowners with varying opportunity costs to enrollment. (JEL Q15, Q18)

Date: 2014-01-01
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Journal Article: The Effect of Conservation Priority Areas on Bidding Behavior in the Conservation Reserve Program (2014)
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