Examining the Economic Implications and Considerations for Continued Involvement in the Conservation Reserve Program in Texas

The Conservation Reserve Program (CRP) has become increasingly important in Texas due to the high level of program participation, particularly in the high plains of Texas. There is also a seemingly large amount of CRP contracts that will expire, particularly in the next five years. As these contracts expire, it becomes very important for landowners to evaluate fully the options that are available for future land use. This research focused primarily on the ten counties in Texas having the most acres of CRP enrollment, which include Gaines, Deaf Smith, Lamb, Hale, Floyd, Dallam, Hockley, Terry, Castro, and Swisher Counties.

The primary objective was to provide landowners in these counties with a comprehensive list of options available after CRP contract expiration. The options were identified as re-enrollment in CRP, conversion back into crop production, lease land to a tenant as rangeland, or lease land to a tenant as cropland. Latin Hypercube simulation was used to generate a stochastic value for probable net returns per acre for the four options. The four options were then evaluated based on a variety of methods typically used to rank risky alternatives. The results indicate that CRP enrollment is the most preferred option for landowners. Dryland crop production, while it can return very high net returns per acre, also has the highest amount of risk involved. However, it is important to note that the best ranking method and decision are dependent on the specific decision maker and situation.

The second objective of the research was to determine if there are measurable economic impacts to the agricultural services industry associated with CRP enrollment. OLS regression models were only run for five of the ten counties in the study area due to a lack of data reported by the Bureau of Economic Analysis. Of the five counties modeled, the Gaines, Dallam, and Hale County models indicated that CRP has played a significant role in the annual earnings of the agricultural services industry. The results suggest that there would be a benefit in conducting further research to examine the relationship between CRP enrollment and the agricultural services sector.