PRELIMINARY VERSION - PLEASE DO NOT CITE
Alternative Land Retirement Programs
Table 2 presents the results of three alternative land-retirement programs; the uniform
land retirement policy, the least-cost land retirement program with the acreage goal, and the
program that reduces the total water use by 10%. The uniform land retirement policy examines
the implications of a uniformly offered rental payments to all the eligible farmers in the region.
This program is usually implemented with a bidding cap. For example, a soil-based bid cap is set
at the county level in the Conservation Reserve Program. We consider a policy that offers a
uniform rental rate to all the eligible farmers in order to retire 100,000 acres irrigated cropland.
This target land is chosen because the current policy proposal aims at retiring 100,000 acres of
cropland out of production in the ESPA. Non-irrigated land is not eligible for participation in the
program. Under such a program, all the farmers with the expected profits from crop production
less than the uniform rental rate will participate in the program. All the participating farmers will
receive the same rental rate regardless of their productivity or water use in the region. We build a
heuristic procedure to determine the uniform bid cap that would induce 100,000 acres irrigated
cropland retirement. First, a low bid cap (rental rate) is set, land parcels with the expected profits
below the bid cap are selected, and the total acreage enrolled is calculated. The rental rate is then
increased by small increments until the acreage goal in the region is achieved. The uniform rental
rate is found to be $147/acre. The farmers taking their land out of production are located in five
counties, namely Blaine, Butte, Clark, Gooding, and Lincoln.
Under the least-cost land-restriction model, the objective is to retire 100,000 acres
irrigated croplands with least cost. This program minimizes the total rental payments given to the
farmers subject to the target land area. The rental payments are equal to the per-acre expected
profits from crop production determined with the base model. With the least-cost land retirement
13