Improving NRCS EQIP Allocation and Ranking:

More Bang for the Buck

Ralph HeimlichRalph HeimlichAgricultural Conservation EconomicsAgricultural Conservation Economics

forforEnvironmental DefenseEnvironmental Defense

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

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)

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.”

EQIP Fund Allocation

Criteria

Allocated below

State level

Ranked at State Level Total

None 7 0 7

Resource concerns only 15 2 17

Resource concerns and other 14 12 26

All criteria 1 0 1

Total 37 14 51

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

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.

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

Addressing National PrioritiesEQIP ranking by national priorities and state resource concerns, 2003

Yes No Unknown National priorities Reducing nonpoint source water pollution 50 0 1 Reducing air emissions 29 21 1 Reducing soil erosion 48 2 1 Promoting at-risk species habitat 40 10 1 All National priorities 15 36 1 State resource concerns AFO/CAFO 48 2 1 Grazing 46 4 1 Farmland preservation 8 42 1 Achieving RMS systems 18 33 1 Plant health 25 25 1 Forestland 21 29 1 Water quantity 31 19 1 Other 18 32 1

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

Incorporating Other Rule Requirements

Other rule requirementsNumber

of States multiple resource concerns 46 longer-lived practices 6 leveraging other projects 11 multi-county or multi-state projects 6 contiguous cooperative projects 5 ways of measuring performance and success15 degree of difficulty meeting regulation 42

Total 52

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

BMPs for Ranking: Measuring Performance

• 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

Existing resource condition

Expected resource condition

after approval

=Degree of

Improvement from funding

this application

Measuring Performance

EQIP ranking by basis for evaluation, 2003 Basis Total Quantitative assessment of resource problems 14 Assessment of presence/absence of resource problems 12 Listing of practices requested/presence/absence of problems

11

Listing of practices requested 5 Mixed approaches 8 No information available 2 Total 52

BMPs for Ranking: Scaling

Points reflect improvements

on the farm

Costs increase with scale

(acres, animals)

Need to weight points by scale of operation to be fair

Once cost is included, must consider scale

Only 1 State used true scale neutrality

Cost-effectivenessAdd 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

Addressing Cost-EffectivenessEQIP ranking by cost-effectiveness, 2003

Number of states

Not addressed explicitly 36 Lowest cost per unit 7 Statement that practices are cost-effective 3 Tiers of practices by cost-effectiveness 2 Cost-effectiveness as a tiebreaker 1 Environmental benefit points per dollar 1 Addressed in some counties. 1 No information available 1 Total 52

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

For More Information...

Contact

Ralph Heimlich, 301-498-0722, aceheimlich@comcast.net

Suzy Friedman,202-572-3376 sfriedman@environmentaldefense.org