Developing a Comprehensive National Conservation Cost Database (NCCD)

1. Developing a Comprehensive National Conservation Cost Database (NCCD) Mark Xu NRCS 67th Annual SWCS International Conference

2. NRCS Payment Schedules • What is a payment schedule? A collection of payment rates used to reimburse estimated costs incurred by program participants for the installation of conservation practices using conservation programs such as EQIP, WHIP, AMA, AWEP, and CBWI. • State-set payment schedules: 2008-2012 • Centralization of payment schedules: • FY2012: 15 priority practices • FY2013: 154 practices

3. Well Developed Conservation Costs as Major Elements of NRCS Payment Schedules

4. Organization of Conservation Cost Development for FY2013 Payment Schedules Leadership & Process Mgt Component Prices Components & National Scenarios Regional Scenarios

5. Practices, Scenarios, and Components • Practices --- 154 conservation practices, give or take a few, defined by NRCS conservation practice standards. • Scenarios --- each practice can be implemented differently by scenario, depending on • the geographic area where it applies, • the typical resource setting in which it is used, and • the natural resource concerns to be addressed • Components --- building blocks of scenarios, unique products or services necessary for implementing conservation practice scenarios.

6. Development of National Scenarios • Principles for national scenario development • Each national scenario should meet the criteria in the conservation practice standard • Each national scenario should be based on the least-cost principle • Each national scenario should usually be nationally applicable and may not include some of the regionally specific scenarios. • Outputs for national scenario development • National scenarios for all 154 practices have been developed, some of them are still been finalized. • National tech teams also sets maximum number of scenario limit by practice.

7. Development of Components • How components are produced? • Scenario building involves determining how many of what components are needed. The process of developing national scenarios also necessarily produce a list of components to be used by the scenarios. • Component by practice table for each practice from national technical teams sent to national cost team for review and synthesis, filtering redundancy and inconsistency among components from different practices. • National technical teams uses components completed by cost team to finalize national scenarios. • Over 1,200 unique components were developed.

8. Development of Component Prices • Accomplishments: over 60,000 price data points developed (1,200 components x 51 states) • Principles • Reliability and credibility • Consistency • Efficiency

9. Principle #1: Reliability and Credibility • For compiled data, data sources must be credible. Data compilation follows sound method. • For market data, large national vender are preferred over small local venders. • Data description must match the definition of the component exactly. if not, then some adjustments are needed. • Data needs to be recent enough. Within 1 year is our goal

10. Principle #2: Consistency • For the same component, data sources and calculations of average state prices have to be the same or very similar for all states. • Data sources for similar components need to be the same or very similar. • For the same component, data sources needs to be relatively stable and consistent by year.

11. Principle # 3: Efficiency • When multiple methods meeting the same reliability, credibility and consistency requirements, price data should be collected with the least amount of time and effort. As such, we gave higher priority to data sources that have state average data already developed. • Indexes may be used to estimate state prices from national averages or single state prices, instead of collecting price data by state for the same component if such data does not already exist or can be easily calculated from other sources.

12. Procedure for Developing Component Prices • Develop prices by component type • Data source evaluation and documentation • Estimate component prices by indexes if prices for all states are not directly available. • Adjust all prices to a certain month of a year, January 2012, for example.

13. Develop Prices by Component Type • 21 component types • By characteristics and data sources • Lead to: • Efficient use of existing expertise in the team. • Developed expertise for future price development • Avoided redundancy • Matching with price indexes

14. Data Source Evaluation

15. Data Source Classification • Nationally published public and private data sources: DOL Wage Rates by Occupation • National commercial databases: RSMeans • National vendors: Fencing materials, seedling and chemical suppliers • State/local vendors and other data sources • Past state payment schedule cost data

16. State Price Development • Three situations • Prices for all states are the same --- all states use the same national average price for the component. • Prices differ by state and all state prices are available --- enter all state prices. • Prices differ by state and all state prices are NOT available --- need to estimate missing state prices. • Estimation method: price indexing • RSMeans city Indexes: Concrete, Earthwork. • Custom Indexes. Example: Fertilizer

17. RSMeans City Indexes • RSMeans City Indexes cover 20 sectors, 400+ US cities, and are differentiated by Material, Installation, and Total Cost. • State Indexes for the same sectors are developed by averaging RSMeans City Indexes within each state for cities with population less than 50,000.

18. Formulas for State Price Estimation • From National average price:Average price of the component for state i = National average price of the component * Price index for state i / National average price index • From a state price:Average price of the component for i state= Average price of the component for state j * Price index for state i / Price index for state j

19. Adjust all component prices to January 2012 • Each component is labeled with the month and year of its price data. • Using the NASS Prices Paid Index, we adjusted all prices to August 2011 by matching component types and PPI types. • Formula: Component price in August 2011= Component price at time t * Matching NASS PPI in August 2011 / Matching NASS PPI at time t

20. Development of Regional Scenarios • Inputs • National scenarios • Components by practice list • Component prices by practice by State • Maximum number of scenario by practice • Process • Accept a national scenario as it is • Modify a national scenario • Develop a brand new scenario • Additional principle: typical regional scenario • Status: still in development, will complete by the end of September, 2012

21. Outputs for the NCCD • A component list: over 1,200 • A component price by state list: over 60,000 • A scenario cost list by region, completed with detailed scenario definitions, sizes, components used, along with component prices and quantities.

22. Future Potential Development • Data need difference • Payment schedules: state average prices for typical regional scenarios • Conservation planning and evaluation: state or local prices for individual scenarios • Potential future developments • Augment NCCD with atypical scenarios and local component price data • Incorporate NCCD in a data distribution system to make it easily accessible and customizable