Empirical Calibration of a Least-Cost Conservation Reserve Program

sorghum, soybeans, sugar beets, tobacco, vegetables, wheat, cattle, dairy, eggs, hogs, and
poultry. Capital includes farm machinery and vehicles. Labor includes both farm household
and hired labor. Energy inputs are diesel, gasoline, liquid propane gas, and electricity.
The materials category consists of seed, fertilizer, chemicals, supplies, feed, livestock inputs,
poultry inputs, custom work, and repairs.

⁵The USDA Economic Research Service divides the country into “Farm Resource Re-
gions” with similar physiographic, soil, and climatic characteristics.

⁶ Data on government payments, acreage enrollment, and rental rates come from Envi-
ronmental Working Group (2005), Farm Service Agency (2005a), and National Agricultural
Statistics Service (2001), respectively.

⁷For more complex model incorporating additional aspects of the program, see Smith
(1995).

⁸The actual CRP has a cap limiting enrollment to 25 percent of farmland in any county.

⁹ Information on regional cropland and CRP participation comes from Vesterby (2002)
and Economic Research Service (2003).

References

Aigner, Dennis, C. A. Knox Lovell, and Peter Schmidt, “Formulation and Estimation of
Stochastic Frontier Production Function Models,” Journal of Econometrics, 6(1) (1977),
21—37.

Baron, David P. and Roger B. Myerson, “Regulating a Monopolist with Unknown Costs,”
Econometrica, 50(4) (1982), 911—930.

Caves, Douglas W., Lauritis R. Christensen, and W. Erwin Diewert, “Multilateral Compar-

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