Bucks for Ducks or Money for Nothin’?: The Political Economy of the Federal Duck Stamp Program

1. Bucks for Ducks or Money for Nothin’?: The Political Economy of the Federal Duck Stamp Program Swope, Benjamin, and Anderson

2. Federal Duck Stamp Program • The Duck Stamp Program was set up as a user fee program to provide money for waterfowl habitat acquisition. • The history of the Duck Stamp Program, however, reveals that it has been more expensive and less effective at conserving waterfowl habitat than might be suggested by the FWS.

3. Why Has the Program Not Been More Successful? • Two strands to the investigation: • Consider the factors that have determined the program’s funding levels. • How has the money been used? • Examine the links between farm programs, farmland prices, and purchases of waterfowl habitat. • Do farm programs help or hurt?

4. General Findings • Although farm interests played a key role in reinvigorating the DSP at a key junction, they have been the major impediment to habitat acquisition. • The efforts of duck hunters to preserve habitat have been repeatedly thwarted by bureaucrats and politicians who have pursued other objectives.

5. History of the Federal Duck Stamp Program • The Migratory Bird Hunting Stamp Act was passed in 1934 to provide funding to purchase habitat, and pay for administrative and enforcement activities. • The stamp cost $1 and was raised to $2 in 1949 at the request of duck hunters. • Between 1934 and 1958 only 15% of the funds went to land acquisition.

6. Duck Stamps • 1934 Duck Stamp • 1949 Duck Stamp

8. 1958-1961 • The Duck Stamp Act was amended in 1958 to require that 100% of the funds generated was to be used by the FWS for land acquisition. • The price of the stamp was raised to $3. • In 1961 Congress established a $105 million loan program to be used between 1962 and 1976 for acquisition of waterfowl habitat.

10. Politics Behind the Funding • Hunters and conservationists argued that the intent of the original DSP was to provide funds for acquisition. • The wording of the Duck Stamp Act did not specify in what proportions the funds were to be allocated. • The effects of 25 years of farm programs on land use and land prices were now fully visible.

11. Farm Income Support Programs • The farm programs had two major consequences relevant to the Duck Stamp Program: • Wetlands were being cleared and drained at a rate greater than they were being acquired and protected. • Land prices were being driven up by crop price supports, making suitable habitat more expensive to acquire.

12. Perverse Incentives • Farmers could increase there support payments by converting marginal lands (wetlands) into cropland, thereby increasing their base acreage. • To be considered as a set aside, an acre had to be legitimate cropland, which meant clearing, draining, and even cultivating the land. • Between the mid-1950s and mid-1970s, wetland losses averaged an estimated 550,000 acres per year.

13. Wetland Losses • Wetlands in the northern plains were especially hard hit. • High participation rates in the wheat programs. • Fairly low cost of draining prairie potholes, which is ideal waterfowl nesting habitat. • The effect of this drainage on duck populations was becoming clearer by late 1950s.

14. Rising Cost of Habitat • Because price supports and set-asides raised the profitability of marginal farmland to the owner, its price rose. • Even if a farmer had yet to drain this marginal farmland (wetlands), its option value, and therefore its price, rose as farm program payments rose.

16. Politics of 1961 Amendments • The 1961 legislation, because it accelerated purchase of waterfowl habitat under the DSP, was politically popular with farmers because it helped to supplement acreage control programs. • The 1958 legislation authorized the acquisition of small wetland and pothole areas. • Located in wheat country, acquisition of potholes substituted for acreage restriction programs.

17. Potholes • Located in Canada, North Dakota, South Dakota, and Minnesota, these potholes constituted only 10% of total duck nesting habitat, but this region produces from one-third to one-half of all ducks in North America. • For breeding, ducks prefer small ponds and marshes to large lakes.

19. A Current Report • “The status of duck nest success in the recent past in the Prairie Pothole region seems clear. Nest success was too low for duck populations to sustain themselves. Unless steps are taken to improve duck nest success in the future, we will likely see further declines in numbers of these and possibly other waterfowl species.” biology.usgs.gov

21. 1962-Present • The wetlands loan established in the 1961 legislation was extended to 1983 (from 1976) and the permitted indebtedness was increased to $200 million. • Since 1977, acquisitions have been concentrated in the prairie pothole region.

22. Program Funding • Determinants of duck stamp sales: • The abundance of ducks (+). • Trend in alternative leisure activities (-). • Changes in income on recreational spending (+) • Membership in conservation organizations (+) • Non-hunting demand for stamps. • The regression results are as predicted.

23. Explaining Duck Stamp Sales

24. Other Funding • Confronted with unhappy hunters, policy makers were forced either to cut the farm programs or turn to taxpayers for additional funds. • Public choice analysis predicts that rational politicians chose the latter.

25. Determining Other Funding • Unemployment Rate (-) • Cumulative outstanding amount of Wetlands Act borrowing (loan balance) (-) • Total real personal income (+) • Duck population (-) • Real price per acre of farmland • Inelastic demand (+) • Unitary elastic demand (0)

26. Other Funding Regression Results • Higher unemployment, and a higher outstanding loan balance reduces funding. • Higher personal income increases funding. • It appears that duck habitat is a luxury good. • Duck populations do not affect funding. • Because farm values do not affect funding the demand for habitat is approximately unit elastic.

27. Effect of Farm Programs on Habitat Acquisition • Farm programs that raise farmland values are (1) price supports, and (2) subsidies for converting wetlands to farmland. • Wetlands that formerly would have been sold to the DSP at a low price now command a price that equals the present value of rental payments under acreage restriction programs.

28. Farmland Prices and Habitat Purchase Prices • If a farmer sells a wetlands acre to the DSP that had been counted as a set-aside, then he would have to take a productive acre out of production for the set-aside. • Farmers would not sell a wetland acre for less than a productive acre. • Thus, the DSP was paying top dollar for marginal farmland . • Without the set-aside programs, wetlands would sell for a lower price.

29. Key Facts: Downward Spiral • Agricultural programs have raised farmland prices. • Acquisition budgets have not risen with the price of habitat, causing a reduction in the acquisition of habitat. • Less habitat means fewer ducks, which means fewer duck stamp revenues, which means fewer additional habitat purchases.

30. Farm Policies Thwart Waterfowl Policies • Despite the additional funding beginning in 1958, the accelerated wetlands protection efforts were more than offset by increased wetland conversion. • What the duck-stamp hand was doing to enhance waterfowl habitat was being more than offset by the agriculture-policy hand.

31. Conclusions • The FWS spent duck stamp funds on activities other than habitat acquisition. • Farm programs raised the cost of habitat conservation under the DSP. • Farmers and hunters joined forces to increase tax funding (1958), but the farmers were the primary beneficiaries. • And now government policies force private landowners to provide wetlands without payment (for past sins).