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Green Payments and the 2007 Farm Bill

Green Payments and the 2007 Farm Bill. Sandra S. Batie Elton R. Smith Professor Michigan State University. Outline of Talk. What is a green payment? There are different shades of green. Green program design questions Different results from different designs The Administration proposal

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Green Payments and the 2007 Farm Bill

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  1. Green Payments and the 2007 Farm Bill Sandra S. Batie Elton R. Smith Professor Michigan State University

  2. Outline of Talk • What is a green payment? • There are different shades of green. • Green program design questions • Different results from different designs • The Administration proposal • My recommendations

  3. What is a green payment? • = gov’t expenditure to farmers and ranchers for the provision of an environmental service • Objective: improved environmental performance • Not a new concept • ≠ WTO green box

  4. There are different shades of green • Environmental performance has been a secondary objective to other Farm Bill objectives—even in conservation programs

  5. Farm Bill Instruments: Green-ness and 2006 Budgetary Expenditures $4.5 B LDP Direct Payments $4.9 B $3.9 B Counter Cyclical Payments CRP $1.9 B $2 B Working Lands (EQIP & CSP)

  6. All green payment programs must answer: • What is (are) the objective(s) of the program? • Who should get paid? • How much will they get paid? • What should they get paid to do?

  7. Different designs of green payment programs result in: • Different geography of payments • Different environmental outcomes • Different program costs

  8. Example: Who should get the payments? • Every farmer and rancher? • Current Farm Bill commodity producers? • Those who produce the most valued environmental services? • Those who produce foods that the medical community says we should eat? • Mid-sized and smaller farms?

  9. The Administration Proposal • Incremental movements to be more WTO compliant? • Conservation Enhanced Payment Option • Expanded CRP but with biofuels production

  10. The 2007 Farm Bill • 2006 CBO baseline in conjunction with FY 2008 budget resolution will be the guide for spending authority

  11. My Recommendations • Target, tailor, and transparency (e.g., accountability) • Precision Conservation • Special projects • Get serious about compliance • Payment to group of farms and ranches • Payments for management skills and practices • Technical assistance for on the ground help • R and D for complementary technologies

  12. Thanks

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