Improving NRCS EQIP Allocation and Ranking: More Bang for the Buck Ralph Heimlich

1. Improving NRCS EQIP Allocation and Ranking: More Bang for the Buck Ralph Heimlich Agricultural Conservation Economics for Environmental Defense

2. EQIP Expansion After 2002 • Four-fold EQIP funding expansion • average of $200 millon/year in 1996-2001 • average of $830 million/year after 2002 • Shift in emphasis from conservation priority areas to more open enrollment • Confusion about the role of cost and cost-effectiveness

3. Environmental Defense Analyses • In January 2003, Environmental Defense issued “Getting More Bang for the Buck” analyzing the 2002 EQIP program • We followed up with “Getting a Bigger Bang for the Buck”, analyzing allocation and ranking procedures for all states in the 2003 EQIP program (see handout for URLs)

4. EQIP Fund Allocation Criteria 7 C.F.R. Sec. 1466.6: "State conservationist will . . . (c) Use the following to determine how to manage the EQIP program and how to allocate funds within a State: (1) The nature and extent of priority natural resource concerns at the State and local level; (2) The availability of human resources, incentive programs, education programs, and on-farm research programs from Federal, State, Indian Tribe, and local levels, both public and private, to assist with the activities related to the priority natural resource concerns; (3) The existence of multi-county and/or multi-State collaborative efforts to address regional priority natural resource concerns; (4) Ways and means to measure performance and success; and (5) The degree of difficulty that producers face in complying with environmental laws.”

5. EQIP Fund Allocation

6. BMPs for Ranking: Rank Resource Concerns Separately • Allocating funds to resource concerns and ranking them separately helps focus the evaluation • Can tailor ranking process to the resource concern • Only 21 States ranked concerns separately

7. BMPs for Ranking: Rule Requirements Incorporate all of the criteria required by the EQIP rule to be factored into ranking and allocations within states – they are good criteria and they’re the law.

8. Rule Requirements: National Priorities • The National priorities for EQIP are: • Reducing nonpoint source water pollution • Reducing air emissions • Reducing soil erosion • Promoting at-risk species habitat • State EQIP program resource concerns should relate directly to these priorities • Additional resource concerns can be addressed

9. Addressing National Priorities

10. Incorporate Other Rule Requirements That Enhance Performance • Address multiple resource concerns • Use longer-lived practices or agreements • Leverage human resources, incentive, education, and on-farm research programs • Bolster multi-county or multi-state collaborative efforts • Use ways to measure performance and success • Consider the degree of difficulty producers face in complying with environmental laws

11. Incorporating Other Rule Requirements

12. BMPs for Ranking: Percentage Multipliers for Rule Requirements That Enhance Performance These factors increase the value of a plan in proportion to the other benefits of the plan All multiplier factors are mandated by the rule All multiplier factors help determine the likely magnitude of success

13. BMPs for Ranking: Measuring Performance Existing resource condition Expected resource condition after approval Degree of Improvement from funding this application = • Award points for: • The magnitude of the environmental benefits • Shown by the degree of improvement • Reflecting the level of performance of conservation practices • Measure actual environmental conditions, e.g., Tons of soil erosion • Use levels of management intensity as a surrogate, if necessary

14. Measuring Performance

15. BMPs for Ranking: Scaling Once cost is included, must consider scale Costs increase with scale (acres, animals) Need to weight points by scale of operation to be fair Points reflect improvements on the farm Only 1 State used true scale neutrality

16. Cost-effectiveness Add points from all sections, appropriately scaled, and divide the total by the total cost Calculating the degree of cost-effectiveness is the only way to ensure that EQIP funds give the most “bang for the buck” The plan with the highest ratio of points to cost is THE BEST plan evaluated in this category because it provides the most benefits (points) for each dollar spent

17. Addressing Cost-Effectiveness

18. Four Key Improvements • Rank resource concerns separately • Measure levels of performance or management intensity • Calculate the degree of cost-effectiveness • Reward special projects that incorporate cooperative, leveraged, multi-county, multi-state or regulatory relief elements

19. For More Information... Contact Ralph Heimlich, 301-498-0722, aceheimlich@comcast.net Suzy Friedman,202-572-3376 sfriedman@environmentaldefense.org